Written by Pawel Tomczyk
In the world of cryptocurrencies, equity tokens are tokens which are similar to stocks, where each investor will hold ownership and rights by holding them.
Equity tokens are sold through ETOs (Equity Token Offerings). Just like IPOs (Initial Public Offerings), startups raise capital to be used towards their seed development stages. By default, equity tokens are also different than utility tokens because they give a form of security to the investors – by involving them in the growth of the blockchain. As these tokens also function as stocks, they can pay out rewards via appreciating token value, depending on their startups’ performance in the market.
The sale of equity tokens through ETOs have become somewhat of a trend, and this trend looks like it won’t be fading away any time soon as it’s thought that interest in Bitcoin, the mother of crypto, will double as time progresses. As more people continue to get to know Bitcoin, they could dive deeper and explore other new cryptocurrencies (including equity tokens) that they can buy in the hope of racking in profits. Generally, this trend is also shown in numbers, wherein the first half of 2018, the amount of money raised through ICOs already passed the whole of 2017, and it’s easy to imagine that this is having an effect on equity tokens and ETOs as well.
And that’s exactly why new initiatives and projects keep on coming out, selling their tokens as equities.
There are also online platforms out there that help companies to raise money by the sale of equity tokens. One of these platforms is Neufund. They claim that they “are creating the first decentralized global stock exchange,” and they provide an ecosystem in the Ethereum blockchain. Any company (although they prefer companies that are no longer in the seed stage) that wants to create their own equity tokens can simply register on Neufund’s platform and provide their information as required. Neufund will then help turn the company’s investment terms into smart contracts on a blockchain, enabling people to invest through ETH and/or EUR.
Neufund has also worked together with Binance to create what is called “Founders Bank,” which aims to be the first decentralized, stable, and community-based online banking solution. Founders Bank’s offering will be using Neufund’s platform, and they are backed by Binance, one of the world’s biggest crypto exchanges.
By opting to raise funds through the sale of equity tokens, this means Founders Bank will be selling their stocks to the public, so the public will be allowed to become co-owners of the bank. By having a stake of ownership, Founders Bank is really giving the power to the community to decide the direction and development of the solutions needed in the world of online banking.
Located in Malta, it looks like Founders Bank is serious about their mission to provide a whole new system and culture of online banking. Included in their supervisory and management boards are big and experienced names with long experience working in bluechip companies such as JP Morgan, the World Bank, and Deloitte.
Another company that starts their online sale of equity tokens with the help of Neufund is Brille24. Brille24 is an online optician that’s based in Germany. Although they are arguably already well-established (selling more than 2 million glasses and serving millions of customers), they are implementing further improvement steps by creating smart, AI-powered applications.
Brille24’s innovations include the ability for prospective customers to virtually try using glasses online, so they can know what to expect when they are about to buy certain eyeglasses models. Customers can also have an eye exam online by the DDR (Direct Digital Refraction) technology. What’s best of it all, because their shares are now sold in the form of equity tokens, customers can play a part in determining the direction of the company, plus share its revenue in the form of dividends.
And last – but certainly not least – we have Uniti, a Swedish-based electric car startup. This firm, that aims to make “the car of the future,” will be producing 100% electric cars that are safe, affordable, and equipped with various premium technologies. By raising their funds with the help of Neufund, Uniti will strive to complete their model vehicle and first ten test-driven cars that would be available for the public. As with equity tokens elsewhere, by investing in Uniti’s project, investors are holding shares and are entitled to get dividends (in the case of crypto, appreciating token value).
ETOs are the new kids on the blockchain… block. ICOs raised at least $6.9 billion in 2018 alone (and many of those were equity token related). ETO refers exclusively to the offering of equity tokens, it is a type of ICO, but more defined. The term was developed to express the difference moving from utility tokens to equity tokens. Currently, the number of platforms specializing or focused on Equity Tokens Offerings is rising.
With such an innovative and easy take on investing, it looks like these equity tokens are here to stay for years – if not decades – to come.
Welcome aboard the ship of advancement, sailing to the future!
Pawe? Tomczyk is a technology enthusiast and an early adopter. He has been specializing in marketing and Fintech for 6 years. Nowadays, he’s the founder of Cyberius, which specializes in content creation and crowdfunding.