Cryptocurrencies started off as something that would keep them away from mainstream finance. However, the blockchain which acts as one of the basic building blocks of cryptocurrency has found mainstream acceptance because of its features like immutability and transparency. One of the greatest and the most tangible bridges between cryptocurrencies and Real-world trading has to be equity tokens. Equity tokens are similar to stocks which entitles the investor to ownership and the parallel rights that come along with holding the equity.
What are Equity Tokens?
Equity tokens are sold through Equity Token Offerings (ETOs) that are quite similar to Initial Public Offerings (IPOs). Startups can use ETOs to raise capital that can be used for their seed development stages. Buy inherent design, equity tokens are quite different from utility tokens because equity tokens represent a form of security to the investors. This involves the investors directly in the growth of the blockchain and these tokens can also function as stocks. Based on the performance of the startup in the market, the price of the tokens can appreciate in their value.
The Current Trend:
The sale of equity tokens has become quite a fad these days, and it doesn't look like it will fade anytime in the foreseeable future. This is evident in the fact that the interest in the Bitcoin, the mother of all cryptocurrencies, has been constantly increasing, and is bound to increase in its magnitude of interest with every passing year.
The interest in Bitcoin has only initiated the cryptocurrency enthusiasts to explore other new cryptocurrencies including equity tokens in a hope to increase profits. Security Token Offerings (STOs) have surpassed the lucrativeness of ICOs, which had seen greater numbers in the first half of 2018 alone than the entire 2017. The confluence of the elements of traditional finance like equities and new age technology like the blockchain is expected to not only create new markets but also a revolution in the field of equity trading.
The Platforms for Investing in ETOs
There are online platforms that help startups raise their funds by the sale of equity tokens. One such platform is Neufund, which claims to be in the process of creating the first decentralized Global stock exchange which will function on the Ethereum blockchain. Although Neufund prefers companies that are Beyond The Seed States, all that a company needs to do is just simply register on the platform and provide the required information. Neufund Will help turn companies investments into smart contracts which can enable people to invest through either crypto or fiat currencies.
The Extension:
What has happened with Neufund is just the first fall in an array of dominos. They have collaborated with Binance to create a ‘Founders’ Bank,’ said to be the world's first decentralized, stable and community-based online banking solution. The triumvirate of Neufund, Binance and Founders’ Bank will form one of the world's most comprehensive crypto exchanges with real-world implications.
If a startup opts to raise its funds through equity tokens, the Founders Bank will sell the stocks to the public and the public will also become co-owners of the bank. This translates into real power be given to the community to decide the direction and development of the solution. Considering the limitations and challenges and jurisdiction, the Founders bank is located in Malta, a country whose legal system is quite accommodative of the cryptocurrency and blockchain revolution. The supervisory and management board consists of experienced stalwarts from big blue-chip companies like JP Morgan, Deloitte, and the World Bank.
Living and Breathing Examples:
There have been instances of companies that have used this platform for the online sale of equity tokens. Brille24, an optician based out of Germany, has issued equity tokens to invest in creating smart applications powered by artificial intelligence. Uniti, an electric car startup based out of Sweden, has also used Neufund to raise funds for their safe, affordable and feature-rich electric cars that would be made available to the public.
ETOs - The ICOs of the Present and the IPOs of the Future:
Combining the power of traditional finance, and the utility and security of the blockchain, ETOs stand among the most recent and the most practical applications of the blockchain. While ICOs pioneered the purpose, ETOs have made the process more refined and regulator. The fact that someone is entitled to earn a part of the prophets stands for more lucrative than just having access to a certain utility or a privilege.
Building Your Own ETO Platform:
The number of companies that offer customized ETO platforms is increasing. However, creating such a platform is not just about technology but also about understanding the market and above everything, having a thorough knowledge about the elements that needed to get into the smart contract.
Blockchain App Factory’s blockchain developers can help you develop your own equity token offering platform which is robust, practical and free from any flaws both in terms of design and security.