Security Token Offering vs Initial Coin Offering: Everything You Need to Know!

sto vs ico

Over the past decade, cryptocurrencies have become more popular among people. Cryptocurrencies are virtual currencies that are recorded on the blockchain. A blockchain is a distributed ledger that has massive value in the finance industry. Many companies have started incorporating blockchain technology and cryptocurrencies in their business verticals. 

For starting any sort of business, you would require a huge amount of funds. In the olden days, funds had been collected using traditional means of crowdfunding like finance, IPO, etc. After the emergence of cryptocurrencies, most startups and crypto preneurs started raising their funds by means of crypto crowdfunding. 

Crypto crowdfunding exists in various types such as ICO, STO, IEO, IFO, IDO, etc. Among these methods, ICO and STO are more popular. Most people have queries on the difference between STO vs ICO. 

In this article, we shall discuss ICO, STO, and the difference between them. Come, let us dive into the article with…

What is an Initial Coin Offering (ICO)?

ICO is a cryptocurrency-based equivalent of an initial public offering (IPO). It has been popular since 2017 and many people have raised funds for their business using ICO. ICO is a fundraising campaign where a startup will launch a whitepaper instructing their project’s goal, count of tokens, time period, and all other information about a project. Investors who are interested in the project will fund it. Crypto tokens will be offered as a reward by the startups in exchange for the funds raised. 

Tokens offered in ICO are referred to as utility tokens which means that an owner of a crypto token has the right to access products or services offered by the startup. ICOs have reaped a hefty return for both the startups and the investors. Like other crowdfunding methods, there will be no regulations and involvement of central authorities. Hence, ICOs are completely decentralized. As per the expert’s opinion, ICO is considered an ideal method of crypto crowdfunding. 

Benefits Of an ICO

  • It is an independent platform for raising funds
  • ICO launching cost is low when compared to other methods
  • It is very easy to create an ICO website
  • No restrictions on launching ICO
  • High liquidity can be attained within a short span of time
  • There are no prior limits for raising funds
  • No government and third-party involvement
  • It is easy to attract massive investors using ICO

These are the benefits of launching an ICO. 

now, we shall discuss…

What is a Security Token Offering (STO)?

Security token offering (STO) is quite similar to an initial coin offering as they both are used for raising funds for startups. STO is a regulated method of fundraising where the government bodies issue security tokens. Security tokens are created by backing real-world entities like Bonds, real estate, assets, valuables, etc. Security tokens are validated by the SEC and local government regulations should be followed. 

Security token offering offers full ownership over a completely secured blockchain ledger. STO is highly secured as there will be involvement of government authorities. So, more trust will be built among the investors. Other than the regulations, all other processes will be the same as there in the initial coin offering.

Benefits Of an STO

  • The value of assets can be divided into smaller values
  • Offers larger liquidity
  • STO is completely risk-free because of the SEC regulation
  • Higher market efficiency
  • Builds great trust among the investors
  • Cuts all middlemen and brokerage

Now, you might get an idea about ICO and STO. Yet still, you will be eager to get a clear understanding of the differences between security token offering vs initial coin offering. Come, let us see the…

Differences Between STO vs ICO

        Initial Coin Offering (ICO)         Security Token Offering (STO)
In ICO, the fundraising startup will issue crypto tokens for the investors to support with funds for their projects. In STO, security tokens are issued to the investors by following all regulations of the governing body.
It is the first crowdfunding mechanism to evolve in the crypto ecosystem. STO was evolved after ICO to enhance full-fledged security for potential investors.
Launching an ICO has no barrier to entering, so it is very easy for startups and entrepreneurs to kickstart their projects. The STO launching process is somewhat more complex than ICO because the startup will be verified that there is no compliance risk for issuing STO.
ICO is an unregulated form of crowdfunding that doesn’t involve the jurisdiction of a governing body. STO is completely regulated by the Securities and Exchange Commission(SEC) and some local bodies’ regulations also should be followed.
Generally, crypto tokens are created using certain token standards, and no assets are backed by ICO. Here, security tokens are created by backing some tangible assets, shares, bonds, valuables, etc.
ICO is an independent mechanism where anyone can launch and participate. STO includes high regulations to maintain security. So, it is less possible for everyone to launch STO.

These are some of the differences between an initial coin offering and a security token offering. After knowing about ICO and STO, if you wish to launch any of these platforms, certain steps have to be followed. So, let us see…

How to Start a Successful ICO and STO?

There are certain steps that should be followed for launching ICO and STO. Now, we shall discuss those crucial steps individually for both ICO and STO.

Steps for Launching an ICO

  • Have a phenomenal idea
  • Analyze your competitors
  • Search for crypto legalized countries
  • Create a crypto token
  • Draft a whitepaper
  • Design an ICO website
  • Promotion and marketing
  • ICO launch

By following these steps, you can easily launch your own ICO website. 

Steps for Launching an STO

Certain steps have to be followed for a successful launch of an STO. Those steps are as follows,

  • Hold an extraordinary business idea
  • Follow the regulations
  • Sketch your whitepaper
  • Have a legal advisory for following the jurisdictions
  • Choose a renowned STO development service provider
  • Create a security token
  • Have an STO website
  • STO marketing and promotion

By following these steps, one can easily launch an STO platform. You can easily develop your own STO website but a crucial one to be remembered is choosing the esteemed STO Development Service Provider. Because the provider will guide you in developing an exemplary ICO and STO website. One such provider in the crypto ecosystem is Icoclone. 

Why Choose Icoclone for ICO and STO Development?

Icoclone is a renowned ICO and STO development service provider in the crypto ecosystem. We have great years of working experience in providing ICO Script and STO development services with great outcomes. We specialize in offering exemplary ICO/STO scripts with splendid customizable features at an affordable cost. Till now, we have offered more than 100+ premium ICO/STO scripts for our beloved clients across the globe.

We have a skilled and well-seasoned team of blockchain developers for developing a high-feature integrated ICO/STO website. If you wish to launch your own ICO/STO, contact Icoclone promptly to get a readymade ICO/STO script for kickstarting your crypto business. In our ICO/STO script, you can add whatever features you need without any hassle.

About About ICOclone

We are the group of blockchain developers who deals with ICO development software to build ICO platform ( Initial Coin Offering website designing, coding, and publication of business). We extend our services on complete blockchain business software solution and mainly to all your ICO business needs for it strives to give its customers the best ICO platform within a very short.

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