Companies that wish to raise a large amount of funding to further their growth tend to rely on initial public offerings (IPOs) once they reach a certain stage of development. This is the stage where they have a proven business model and have reached profitability.
An IPO is a tantalizing prospect for many companies as it’s been a proven method of fundraising for decades. However, the recent rise in popularity of cryptocurrencies and blockchain technology have resulted in a new innovation – initial coin offerings (ICOs) – that may potentially disrupt IPOs as we know it.
Online trading pioneer, Binary is trying to do exactly that. Founded in 1999, the company wants to spearhead a new wave of “IPOs on the blockchain” by launching the first ICO with 18 years of history.
Binary believes that an ICO allows them to go beyond the limitations of a traditional IPO, in addition to the numerous benefits an ICO can offer them and potential investors.
For starters, they can cut out the middlemen or beneficiaries, along with their fees – a necessary evil in any IPO. They can also raise funds from a global pool of investors, and list their tokens on any cryptocurrency exchange by using smart tokens based on a standard protocol.
Meanwhile, investors can look forward to 24/7 trading, faster settlement times, lower trading costs, as well as an immutable and public audit trail. It is also cheaper, faster, and easier for investors to fund their cryptocurrency exchange accounts with Bitcoin or Ether.
The main difference that every investor should absolutely pay attention to is the fact that most ICOs issue utility tokens that are used to transfer value to investors or give them access to decentralized networks.
However, a new trend is slowly emerging in the form of securities-backed tokens.
Another key difference is that securities tokens place a great deal of emphasis on Know Your Client (KYC) and Anti-Money Laundering (AML) checks, as well as adherence to best practices in corporate governance, investor disclosure, and transparency.
Binary is offering up to 10 million ERC20 tokens on the Ethereum blockchain that can be purchased through a Dutch auction on its website starting from 15 November 2017.
These securities-backed tokens come with three main benefits.
Firstly, each token grants you the right to receive payments equal to shareholder dividends. Secondly, you have the right to convert your tokens into Ordinary Shares. Thirdly, you can freely trade your tokens on the Lykke.com crypto asset exchange after the ICO – allowing the tokens to potentially rise in value just like shares on a stock exchange.
Lykke is a Swiss fintech company that’s building a global blockchain-powered marketplace for securities-linked tokens.
Binary will offer the tokens to its clients with a real money account through a Dutch auction process on their website. Binary chose a Dutch auction so that the price for each token will be determined through a bidding process, thus ensuring a fair market price.
Clients can fund their account using a wide range of currencies – both fiat and crypto – and place as many bids as they wish.
However, the ICO will be restricted in a number of jurisdictions to qualified or professional investors. US investors, in particular, cannot participate in the ICO.
Please visit the Binary.com ICO announcement page for more information on the ICO, including the company’s full financial history and risk factors.