The crypto space has various crypto crowdfunding models such as ICO, STO, IEO, IFO, IDO, and more. Among these models, ICO and STO are the most popular. Many people want to know the difference between STO vs ICO. So, let's see the difference between each one of them.
Initial Coin Offering (ICO)
Initial Coin Offerings are useful for budding startups to raise funds by selling crypto tokens that power ICO. In an initial coin offering, a startup will announce a whitepaper outlining the objectives, number of tokens, period of token sale, and their business details.
The benefits of ICO are,
- Funds are not frozen
- Investor entry requirements are low
- There is no interference for investors
- Early token access
- SEC regulation is minimal
- Tokens are exchangeable
- Community Development
- High liquidity
Security Token Offering (STO)
Security tokens are valued by their underlying real-time assets. Real estate, bonds, and physical assets are some of the real-time assets that are backed as security tokens. Potential investors from numerous ventures are now trusting these security tokens as they are under SEC regulations.
Also, STO is extremely secure with the involvement of government officials. As a result, STO attracts many business investments from potential investors. All procedures will be the same as the Initial Coin Offering, except the regulations. The benefits of STO are,
- Cryptocurrency flexibility
- High efficiency
- Partial ownership
- Lower risk
- Global market due to regulations
- High liquidity
When it comes to fundraising, Initial Coin Offering and a Security Token Offering have key differences between them. To understand more about STO vs ICO, read this blog >> STO vs ICO to clear your queries.
Knowing the key differences between these two crowdfunding approaches will allow you to evaluate and select the best one to raise funds for your crypto business.