Utility-tokens or shares? Experts analytics

Endy Callahan

Investors are always on the look-out for a new hot project that can multiply their funds. Previously, they focused their attention exclusively on the stock market. However, now there are very promising ICO projects. What to give preference to? In the article "IPO and ICO within the rights and law of the United States" you can learn about government regulation in these areas.

Utility-tokens: if you want to earn a lot – take risks!

According to Tokendata statistics, 902 initial coin offerings were held in 2017. 142 of them ceased to exist at the stage of attracting investments. Developers of the 276 projects disappeared with the funds raised or stopped public activity because of the inability to fulfill their promises. In 2018, more than 400 startups ceased to exist a year after the launch.

Many companies were doomed at the beginning of their activity. In total, investors spent $ 233 million to Finance blockchain projects in 2017. This state of affairs caused a serious blow to the reputation of the ICO. However, huge profits with some other companies attract investors and encourage them to take risks.

Use and status of Utility-token

Utility tokens are the main tool during ICO. They grant the right to use the services or products of the enterprise in the future. Tokens are usually sold at the initial stage of project development to get funding. They do not fall under the rules of state regulation in the financial sector.

Utility tokens are easy to issue. They do not require registration and, in fact, do not oblige the company to anything. Therefore, such assets are often used only for calculation within their system. Utility tokens usually attract only small investors willing to risk a little money for future profits.

Benefits of using shares

In the classical sense, a share is a document granting the right to own a share of a business. In the stock market, investors can usually earn 10-20% per year from their investments, or even less. Many people use this tool because it grants ownership of real objects, is regulated by law, and companies before entering the stock exchange are carefully checked.

Blockchain startups are increasingly realizing that it is necessary to be honest and transparent to conduct serious business. Therefore, many projects release Security tokens. They often work the same as the shares. The USA SEC has officially recognized Security tokens as securities and they are subject to government regulation. Companies are willing to pay dividends to the holders of such shares.

Traditionally, shares are a reliable and secure tool for investment. Investors who are willing to take additional risk in order to make a profit pay attention to cryptocurrencies. As practice shows, ICO is carried out by many fraudulent and unprofessional startups. Therefore, serious investors do not consider them as an object of investment of their funds. 

On the other hand, Security tokens act as full-fledged shares in the blockchain world. Therefore, serious institutional investors and business angels often deal with them. Why don't you try yourself as a depositor and purchase some tokens? You can start with very small amounts.