This is my entry for the sponsored writing contest organized by @monajam. You can find the contest here
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INTRODUCTION; Security Token And The Associated Problems With Businesses That Aim To Raise Funds Through It.
In exchange of money, investors are usually issued crypto tokens during a token sale or start of an ICO. These crypto tokens are called "Security tokens", and they allow one to own an asset without taking a possession. When the tokens are bought, it serves as a means converting one's money into capital, and this promises dividends, share profits, pay interest or invest in other tokens or assets to generate profits for such token holders.
However, businesses that aim to raise funds by issuing security tokens are being faced with certain problems which include; Security tokens or Securities are prohibited in countries like the US and should be in compliance with SEC, which controls securities transactions, financial professional activities and mutual fund trading so as to prevent fraud and intentional deception before an ICO or token sale to be able to conduct in such affairs. If you are a ‘security token’, you need to abide by the rules of SEC which might not be fair enough.
In addition to this, legal constraints has been placed by most jurisdictions as to what may be traded, and who the holder of such tokens can be. In a broader sense, these legal constraints include KYC and AML validation status, restricted transfers which depend on the investor, time-based spend limits, total volume of transactions, and others.
Not only that, the fact that highly skilled developers, experienced advisors and some other tools are needed for the enhancement and success of the project requires big amount of capital makes it even more tedious, and this has made a lot of ideas to die as early as possible.
Utility Tokens Vs Security Tokens
Usually during startups, investors have the opportunity of purchasing two types of tokens; the Security & Utility tokens.
Utility tokens are otherwise known as app coins or user tokens. This coins however, can be raised by startups as a form of capital for funding the development of blockchain projects, and can be purchased by users during ICOs to gain future access to such services or products.
The differences between these tokens are highlighted below;
• While security tokens are mostly governed by local or federal laws, Utility tokens are totally exempted from federal or state laws.
• Security tokens are usually considered as a real value assets/investments which can be traded. Utility tokens do not, in any form represent capital investment.
• Security tokens do not guarantee its users future access to the company's products or services. However, Utility tokens do.
• The Initial distribution of security tokens is referred to as ICO since they abide with securities regulations. However, since utility tokens are not controlled by laws, their Initial distribution is referred to as token distribution event to avoid violations of securities regulations.
• An example of utility token is
Having known what is meant by security and utility tokens, let's me introduce you to Mobu which will help solve the associated problems.
Mobu And Its Influence On The Release Of Security Tokens On The Blockchain Plus Solutions It offers To Protect Investors.
Mobu, from my perpective, is a smart contract and self-regulating decentralized platform on which security token ICOs can be launched and at the same time capital can be raised. It does these in a way that provides KYC, AML and SEC approval, smart contract implementation and escrow services. It aims at creating a direct relationship between investors and security token ICOs without the intervention of middlemen. Also, it allows those with little or no non-technical background to launch their ICOs with negligible fees.
The platform will also provide solutions to the problems faced by new cryptocurrency developers who are ignorant of all the procedures required prior to offering security tokens to the community. Through the use of Mobu, funds can be raised legally to successfully execute a blockchain project.
Security tokens created and issued through Mobu will be programmed in a way to verify who can transact them. Moreover, the security token restricts token holders from trading to any address that has not been verified thereby providing
issuers assurance that their tokens will only be held by authorized investors.
Mobu brings confidence and trust that will boost economic and operational efficiency. It ushers securities
onto a new decentralized secondary market with negligible fees, instant settlement
times, and around the clock trading
The Mobu ecosystem with its security token, gives investors the assurance that new projects abide with all regulations and laws, and enables withdrawal in case the projects are out of their control.
The Mobu Token
Mobu token is compatible with MOBO ERC20 platform and a MOB20 standard. The token enables a functional marketplace in accordance with regulatory securities on the blockchain, enabling all participants to benefit from it. This token can be traded on approved exchanges.
However, Mobu token could be considered a utility token(due to lock up procedures) to access services. It ensures scarcity of the token so as to increase its demand and subsequently, its value.
The token will also be used as a referral reward for companies/individuals that refer ICO issuers onto the platform. The amount will be equivalent to one-year revenue generated on the platform.
Meet The Team
Roadmap
Final Thought
The problems associated with setting up a new project on the blockchain make the task ahead seems very daunting, however, the invention of Mobu will help solve majority of these problems through its unique services made available. Obviously, Mobu is the way forward in this aspect.
References
If you want a more detailed information about Mobu, feel free to visit:
• Mobu Website
• Mobu Whitepaper
• Mobu Medium
• Mobu Twitter
• Mobu LinkedIn
• Mobu Team
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Hi buddy! :) Amazing review @acheever
Good to see you taking part in this contest as well.
Please allow me to ask just few question.
MOBU seem to be one of very few ICOs that are completly launched as security token. I wonder why. Wouldn't it be better to come up with some utility to their tokens and launch ICO as a utility token?
And also how will they maintan the price? Does MOBU offer Masternodes or POS to attract hodlers? If I cannot use those tokens and on top of that if there is no POS/masternodes introduced into their structure ... then what would make price go up or at least stay on stable level?
Upvote on the way!
Yours
Piotr