According to a new report from “Big Four” giant PwC, cybersecurity is going to be of significant importance moving forward, especially for the security token offering (STO) boom that seemingly everyone in the crypto industry is expecting.
In a new report on ICO/IEO/STOs, PricewaterhouseCoopers (PwC) calls the IEO a “convenient” alternative to the ICO/STO model. Specifically, they write:
“IEO, the new vehicle for Blockchain-based funding, offers a convenient alternative for coin and token launches.”
The significant difference with an IEO, or Initial Exchange Offering, is that it takes place on an exchange, with the backing of the exchange. Implicitly, a higher degree of trust is assigned. But are the underlying products any better? The thrust of the market is that it doesn’t matter.
Security Token Offerings are on the rise. | Source: Shutterstock
All token projects have mostly the same model. They fund by selling tokens, which may or may not have some useful function within their project.
The difference now is that exchanges are taking over the sale and auction of the tokens or coins. Instead of an “initial token offering,” the exchange offers them, making it an “initial exchange offering.”
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By all accounts, including that of PwC, this is a better way to run the sales. On the one hand, there’s a degree of trust placed in the exchange to discern which projects it will list. On the other, people can expect to get what they pay for when they go through an exchange for the sale.
PwC says the model, among other things, enables the issuers to:
“Leverage an established platform (exchange) for marketing activities and directly addressing target audience (crypto-affine investors).”
The bottom line is that the coming IEO/STO boom will have similarities with past bull runs in the token markets. How many of the projects funded will yield a product? The current unknown variable is whether or not exchanges will lend some degree of accountability to projects.
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Everyone including Bitfinex is getting in on the game, with Binance leading the charge through its Launchpad initiatives.
At a minimum, people will have their tokens delivered, and the tokens will have an exchange to trade on. But if the projects don’t make good on their projects, just like the ICOs of yesterday, then why would the tokens have any value and continue to list?
Then again, a project doesn’t have to prosper to make money on the tokens. Interest around a project can drive the price before a product even exists or despite it ever existing.