Greetings from Granada,
last year we saw the potential of ICO to raise funds, selling utility tokens, in some cases, incredibly fast. Some opportunists took advantage of the rocket to cheat and benefit from the most vulnerable investors. Whether the sale is with good intention or not, we all agree that a minimum regulation is needed.
Security tokens can facilitate this aspect, because they require a regulation to be able to operate. Otherwise you would be acting illegally. How SEC promotes in the US (in this post im not focussing that laws should be updated also).
In addition, the value of the utility and security tokens are totally different.
Utility Tokens:
You invested in a fast food chain.
- You got 1000 FFD “fast food” tokens of the utility type. That day, a hamburger cost 10 FFD.
- After a few months, the FFD token had expanded and becoming more popular and attracting more investors. So, you went to the nearest restaurant where FFD is accepted, now a hamburger cost 5FFD. You got it! Now you can buy twice as many burgers as the first time. That was your final benefit.
What utility tokens have achieved real demand like that? So, how many years do you need to get it?
It seems that we only had a speculative value, with uncertain support.
Security Tokens:
This time, you invested in the same fast food chain but buying their security tokens, instead of the food tickets. Now, you can no longer go to the restaurant and change your tokens for hamburgers, but you can get other benefits like:
- Passive earnings
- Dividend distribution
- Right to vote
- Partial owner of entity
- And more that escape from my reach.
Here we have a real value, with real use case. Investors are protected by current laws.
This will gain prominence soon.
How do you think the management of the STOs should be defined in Cardano?
What points would be important to consider?