STO vs. ICO - What is the difference?

[BestCoinInvestments]

At this moment, when new STOs are coming out, it is important to understand the difference between ICOs and STOs.
STO is a token offering that is similar to an ICO, but the main difference is that STOs are regulated.

STOs have become so popular because over the past four years, approximately, pretty much every ICO failed to maintain at least one of the five promises that I call success criteria. 

1. Most ICOs failed to attract enough investment.
2. The majority of ICOs failed to maintain a stable price of the coin or to increase the value of the coin, and so it dropped dramatically.
3. Some of ICOs failed to return the money to the investors.
4. Many ICOs failed to be able to produce the software technology or the ecosystem that they promised during fundraising.
5. Almost all of them eventually failed to be profitable.

"I would compare ICO to vinyl discs, and STO to music cassettes. After the music cassettes, there were CDs and DVDs then the MP3, then Spotify." - Stefano Virgilli.

To learn more about the main differences, read more in our latest article: https://bestcoininvestments.com/sto-vs-ico/

Would you rather invest in an ICO or an STO? 

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[JeromeTash]

Who told you that if something is regulated, then there is guaranteed profit?
If this was the case then why are much more regulated stock campanies like Facebook still making loses time and time again?

You can't just stabilize the coin prices. It's demand that determines that. This is all useless hype. STO are pretty much ICOs covered in sheep's skin.
Then only thing they could try to reduce is scam but that doesn't mean that people won't continue losing money if the projects fail to deliver or if the coins dump.

[BestCoinInvestments]

Who told you that if something is regulated, then there is guaranteed profit?

Who told you that we guarantee a profit on STO investments?

We're just comparing these two offering types. It's for you to decide - whether you want to invest or not.
Anyway - thank you for your opinion!

[RapTarX]

ICO refers to Initial Coin Offering which can be done by anyone through creating a new coin/token. ICO doesn't require to comply with laws and regulations and doesn't require to be backed up by some company.
STO refers to Security Token Offering which must be backed up by an established company/organization and STO must have to comply with all the laws and regulations.

[Pmalek]

The difference is that STO's give their investors a share of the profit the company makes where an ICO only gives you the company token which most of the time losses its value. An STO needs to be regulated by the SEC in order for US investors to be able to invest in it. But an STO is no guarantee for success or stability of the native token.

[JeromeTash]

Who told you that we guarantee a profit on STO investments?

We're just comparing these two offering types. It's for you to decide - whether you want to invest or not.

Don't get me wrong, I reacted exactly to what you said here.

5. Almost all of them eventually failed to be profitable.

Yes most ICOs, didn't deliver, most were fraudulent offerings and scam, while others just simply over hyped their promises but there were a few that did manage to at least fulfill their promises.

With the volatile nature of the crypto market, if you don't know when to buy and when to exit, you are bound to make loses take an example of EOS which was a successful ICO that collected lots of money. Those who exited when it was at $17 know that they made a kill out of it, those who exited when it was less than $2 recently are definitely not the happy group.

As far as I know, STO's much as they are regulated will also be using cryptocurrency as a medium for their tokens, so expect the same volatility we have seen before. They can't stop investors/traders from dumping the token if they want to exit... can they?
So,
- profitability is no guarantee
- Ability to attract enough investment is no guarantee
- Fulfilling promises made is no guarantee.

[Mbitr]

ICO refers to Initial Coin Offering which can be done by anyone through creating a new coin/token. ICO doesn't require to comply with laws and regulations and doesn't require to be backed up by some company.
STO refers to Security Token Offering which must be backed up by an established company/organization and STO must have to comply with all the laws and regulations.

Thanks for clarifying the difference - very succinct ⭐️

[The Cryptovator]

Is there any STO launched or live? Wondering still SEC haven't approved Bitcoin ETF how they will approve STO to raise fund? . Actually there is 2 type of token, utility token and security token. Security Token Offering (STO) means if it's under of SEC standards. So if someone called their project STO so every token holder is the owner of project. For STO I don't think there is need approved from SEC or they are regulating such as project. May be I am wrong, this is my thought only. However there still risk lose of your fund. STO doesn't mean you will not got scam (IMO).

For better explanation you might read this article;
https://medium.com/altcoin-magazine/how-is-a-security-token-different-from-a-utility-token-1eea0e4523cc

[joniboini]

You can find some STO that is currently live, but I don't know how legitimate they are. Some news report that Germany is going to launch or approve an STO soon. But no doubt, the STO ecosystem is still young and there are some interesting platform that will directly compete to provide the best STO ecosystem. Some of them are WeOwn, tZero, and so on. I do believe STO will not entirely replace ICO because some utility tokens are meant for utility, not profit sharing.

[DdmrDdmr]

Just this week, NEXT, a Spanish company that Works on creating a platform for connected cars in order to manage and exploit the underlying data, announced the creation of an STO in order to finance its growth. The STO is allegedly designed to be fully compliant with legal requirements laid out by the CNMV (Spanish national stock market commission), although it has not received the formal kick-off yet, but will soon during Spring 2019.

Source: Se presenta el primer "Security Token Offering" lanzado desde España (in Spanish).

I figure that legal binding is a step towards reducing fraud, but obviously does not guarantee results not positive value evolution of the tokens themselves.