2017 was the year of ICOs. They were a sure way to make money in crypto, and they did create lots of crypto millionaires. But things have changed, and the allure of ICOs is no longer there. Most of them are scams, and governments have been cracking down on them for some time now. Some governments like those of China and South Korea out-rightly banned them earlier this year. But even as ICOs die down, the idea of using cryptocurrencies as a way of raising capital is gaining momentum.
One option that is taunted as a viable replacement to ICOs is the STO (Security token offering) model, as applied on the stellar network. Under this model, investors buy into the tokens of an existing startup. This is quite different from an ICO where people basically invest in an idea. Stellar STOs have lots of potential because they are compliant to securities regulations. That’s because they operate in a similar manner to IPOs, in that they are backed by an underlying asset. This model seems to be gaining momentum as can be seen with the major companies that are beginning to tokenize on the stellar network. Over time, it could emerge as a mainstream way of raising capital both for large businesses and for startups as well.
The other option that could emerge as a competitor to ICOs is the initial service model (ISO). This model has been proposed by the IOTA community, and it has what it takes take the throne away from ICOs. Under this model, anyone seeking to raise funding would do so on the tangle, and would not offer any tokens. Instead they would make use of the IOTA (MIOTA) token. Participants in the network would be rewarded with the promise of a product or a service. This model fully conforms to regulations, which gives it room for growth. But there are a couple of other factors that could push up the uptake of the ISO model. The first one is that applications are built on the highly scalable IOTA tangle. This makes it quite useful in launching applications targeted at high transaction industries. The zero fee nature of the IOTA tangle will also be a key driving force for developers to create applications on the IOTA tangle.
The potential rise of STOs and ISOs is a good enough reason to believe in IOTA (MIOTA) and Stellar (XLM). Once stellar STOs gain momentum, they will add a huge amount to the transactional volumes of stellar, thereby increasing its overall demand. Besides, all transaction costs on the stellar network are paid in stellar (XLM) and that’s huge for the overall demand for stellar. As for IOTA (MIOTA), since ISOs will be using IOTA (MIOTA), it means that the more they are in number, the more its value will increase in the market. These transactions will also serve to strength the tangle and make it more secure, and hence more decentralized. This could see the value of IOTA (MIOTA) rise over time. The future of these two cryptos is poised to rise over time.