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Initial Coin Offerings (ICOs) have been on a tear recently, raising over USD 3.2 billion this year alone. Most ICOs work by issuing utility tokens that give investors access to a specific network or application. However, we’re starting to see a new wave of ICOs driven by securities tokens with the immense potential to disrupt how stock exchanges and IPOs around the world operate.
Meet Binary.com, the pioneer in online binary options trading. It’s aiming to redefine how ICOs are performed through its own ICO that’s scheduled to run from 15 November to 25 December 2017.
Securities tokens with real economic benefits
The unique economic benefits of its ICO, or what Binary.com calls an “IPO on the blockchain” are immediately obvious.
Each Binary.com token grants its owner two exclusive rights: to convert the token into an Ordinary Share, and to receive dividend-linked payments. After the ICO is concluded, the tokens will also be listed on the Lykke.com cryptoasset exchange where they can be bought and sold –– enabling the tokens to potentially rise in value.
Binary.com’s securities-backed tokens immediately stand out when compared to the rest of the tokens offered by most ICOs today. It’s even more appealing considering the fact that Binary.com has a proven track record. Founded in 1999, Binary.com is a profitable and debt-free company that’s recorded over USD 3 billion in turnover to date.
The biggest impact of Binary.com’s ICO however, will be felt when other companies are inspired to hold their own “IPOs on the blockchain”.
The age of the blockchain is upon us
ICOs run on blockchain technology such as the ERC20 token trading system, while IPOs and stock exchanges still use electronic trading systems that are built on pre-blockchain technology. The advantages are plain to see.
Companies that wish to perform an ICO can look forward to:
– Lower costs by cutting out the fees paid to beneficiaries in a traditional IPO
– Raising funds from a global pool of investors instead of being restricted to the same jurisdiction as the stock exchange
– Listing their tokens on any number of cryptocurrency exchanges by using smart tokens based on a standard protocol. In an IPO, you will only see your shares traded on one stock exchange
Investors and traders who wish to participate in an ICO or trade the tokens on a cryptocurrency exchange can expect:
– 24/7 trading, rather than the limited opening hours of a stock exchange
– Faster settlement times (think minutes rather than days)
– Lower transaction costs (around 0.1% to 0.3%) compared to what stock brokers charge (between $10 to $50, or a percentage of the purchase price which can be as high as 1%)
– Faster and cheaper fund transfers using cryptocurrency, rather than a bank transfer to a traditional stock broker
– An immutable and public audit trail of transactions that you can refer to at any time
Considering how blockchain technology has only started gaining popularity in the past few years, stock exchanges should be very worried about the prospect of getting left further behind.
How does the Binary.com ICO work?
Binary.com is issuing up to 10 million tokens that will be available through a Dutch auction on its website.
Potential investors are required to open a real money account with Binary.com. They can fund their account using a wide range of currencies –– both fiat and crypto –– to bid on the tokens.
Due to applicable securities laws, the ICO is only available to residents of selected countries. For example, it will not be available to U.S. investors. In certain countries, prospective investors are required to verify their status as qualified or professional investors.
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