Initial Coin offering - Crypto Tokens explained [ERC 20] - Transcripts

May 06, 2020

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Initial coin offering explained as well as what an STO is. Cryptocurrency tokens and how they work.
Tokens are separated into 3 categories. Utility tokens, investment asset or equity tokens, and currency tokens.
Bitcoin and ethereum are the best two examples. as well as to ERC 20 tokens.

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Welcome back to the channel everybody. My name's Artie with coin caso and in this episode I'm going to teach you everything you need to know about tokens. We're going to discuss what a token is, how many different types of tokens there are and how to actually use tokens. So if you want to get educated on everything. Cryptocurrency please consider subscribing to this Youtube channel where we have multiple episodes on Cryptocurrency knowledge for you to get


So you know about cryptocurrencies and you've heard the word token being thrown around, a token is basically a placeholder for future value or a product or service. Think of it like a $50 Itunes gift card that you can buy on ebay for 30 bucks. That gift card is just a piece of plastic but if you use it at the store it's intended for you can exchange that value for something material. Now I'm going to attempt to explain this in the most basic way possible but it is better if you have some sort of financial knowledge like stocks and equities and bonds. Okay, so how many types of tokens are there? There's actually three. A currency token, a utility token and an investment asset token, currency tokens are tokens that promised future value by exchanging your token for the Cryptocurrency once the project is finished. For example when the ethereum platform was first proposed, you could buy an ethereum token for 18 cents now ethereum coins ether are actually valued at $170 each. Next up we have a utility token, a utility token is actually built to provide investors something other than money. For example many Cryptocurrency exchange platforms offer tokens to their investors and those tokens are actually used to reduce the transaction fees for people trading on their platform that hold their tokens so it has no monetary value but you actually get a discount from using them. And lastly we have an investment asset token. Now this is very similar to a stock or equity in a company.

These tokens are acquired through a process called an S. T. O. S. T. O. Stands for security token offering. It represents tradable financial assets and this is the most secure way of getting a token for investors because it's more regulated and prevent scams from happening. After Bitcoin gained world renowned status after hitting $20,000. Many companies began forming their own tokens to achieve that same status they offered them to people for investment through a process called an I. C. O.

Or initial coin offering. Now we've gone in depth into I. C. O. S. In a previous video about all coins. So watch that first then come back to this video. But basically an I. C. O. Or initial coin offering is a way to crowdfund for Cryptocurrency startup without going through the sec. The Securities and Exchange Commission.

So I. C. O. S. Are unregulated. Basically these companies have an idea for Cryptocurrency and they crowdfund the funds to start the business through an I. C. O. Then once the project is done and live those tokens are actually converted into the Cryptocurrency. Now for the bad news in 2000 and 17 there were thousands of companies releasing their I. C. O.

And their white paper with some fabricated made up business marketing to people getting their attention having people invest their money into their project. Then after the I. C. O. Was launched the product developers actually took all of that money and ran during this time. People and investors lost billions of dollars And made a very bad name for the Cryptocurrency world. And unfortunately that's the way of the world. There's always going to be those people that try to scam other people out of their money. After this period in 2017 the Securities and Exchange Commission actually crack down on these listings of I. C. O. S.

Because they are unregulated. They don't have to go through the process that the sec requires to have equities in companies google and facebook both block the ability to run ads on I. C. O. S. At this point the Securities and Exchange Commission actually offered something to these Cryptocurrency companies the option to do an S. T. O. Now this is very similar to a standard company's I. P. O. It's an easier process than an I.

P. O. But it still goes through the regulatory standards that the sec has for instance vetting the company to make sure their legitimate business and requiring investors to hold onto their tokens for an extended period of time after the initial S. T. O. This prevents a lot of pump and dump schemes that we see. Now let's get into E. R. C. 20 tokens. You're actually able to trade these tokens on different Cryptocurrency exchange platforms because they're based on the ethereum Blockchain and they actually hold a certain value. People trade these tokens just like they do cryptocurrencies.

Now again some tokens aren't worth much but some tokens are actually very valuable. So let's wrap up this video if you want to invest in a new Cryptocurrency startup and they have an I. C. O. Do your research before investing into them. I don't want you to be stuck in a position where you lose all of your money because you didn't do the research on the company. On the other hand, if the company is releasing an I. C. Oh you already have the security and knowledge that this is being governed by the Securities and Exchange Commission in the United States. I still recommend that you do your research on the company to actually see if they will be successful because that's the determining factor. So basically if you're looking for a place to invest your money, I'd rather go with an S. T.

O. Than an I. C. O. I hope you guys enjoyed this video. I hope I was able to teach you something. Please don't forget to like the facebook page. Subscribe to the Youtube channel, join us again tomorrow when we go over the top Cryptocurrency prices as well as the top news in the last 24 hours. Thanks for watching everybody. Don't forget to leave a like on your way out and we will see you tomorrow. All right. Mhm.