Authpaper believes that utility tokens are better than security token in token sales for decentralized platforms
Authpaper, a Hong Kong startup, is doing token sales for their P2P digital data courier solution which combines blockchain, BT, cryptography and other current technologies to deliver huge amount of data with high speed, privacy and unforgeable delivery record. Instead of conducting a security token offering (STO), they are selling utility tokens and believe it is better than to the startup and cryptocurrency world.
Authpaper has been working on electronic document stamping solution since founding in 2016. Finding that physical courier is still the dominant way to deliver a document in commercial world, they believe that the need for delivering private data with high speed and trustworthy delivery record is huge. The platform must be decentralized to prevent the single point of failure, which is a well-known problem of current online document delivery and signing solutions. Hence, Authpaper starts the development of Authpaper Delivery platform to cater this market.
ICO has been disrupting all industries on raising support. Authpaper is selling their tokens, Authpaper Coin (AUPC), from 15th March to 15th August to raise support. Instead of tokenizing the company stocks, AUPC can be used to redeem online services provided by Authpaper and its holders will receive platform currency periodically after the platform is released.
“We believe selling utility tokens is better than security tokens for the platform, token holders and startup”
A security token, which derives its value from an asset, most likely the company shares, that can be traded. One major advantage of security token over utility token is that existing regulations on financial instruments like securities and bonds can be applied to the security tokens. More protections to the investors and regulatory requirements are applied to STO.
However, this advantage is limiting people from investing a project. In cities like Hong Kong, securities cannot be sold or traded publicly unless they are listed on regulated exchanges like HKEX. Number of share holders of a private company is also greatly limited, and all shareholders must pass high-cost and time-consuming anti-money laundering (AML) and know-your-customer (KYC) processes. It means conducting or joining a STO is generally prohibited in these cities.
In USA, anyone issuing any form of securities must register on the SEC. This is costly, time consuming and nearly impossible for foreign companies, especially foreign startups. The protections introduced from the security regulations also vary and may not able to protect investors, especially foreign ones.
“As a Hong Kong startup, we quickly find that selling security tokens is too costly and complicated to be done legally.”
Utility tokens, on the other hand, can be sold globally as a digital product and much more flexible to the token holders. When buying the tokens, only basic contact information is required for filing. Token holders can spend the tokens on platforms in addition to trading them on exchanges. Nearly all current exchanges can trade utility tokens.
Another advantage of security token is the potential of price increases. Like purchasing shares of a company in early stage, the token price can jump 10+, or even 100+ times as the company grows. Utility tokens are used to redeem a certain service or product and many people think that the price will not change.
We believe utility tokens also have potential to rise 100+ times, especially for decentralized platforms. The price of a utility token is based on the relative demand of the platform compared to the supply. By adding new features and promoting the platform to the world, the demand for the token will keep increasing. It is also the reason behind the price growth of cryptocurrencies like Bitcoin and Ethereum.
“For security tokens, you are investing on the growth of a company. For utility token, you are investing on the growth of a blue ocean market.”
When building a decentralized platform like Authpaper Delivery, Authpaper believes that the growth of the platform will go beyond the company. Hence the coin price bases on the platform will increase faster than company stock price. Besides, people who buy the token are believing in the potential of the platform and the market it is targeting, not only the company itself. Selling a utility token is more suitable than security token for decentralized platform.
Do you want to know more details on the project? Read more information here: https://authpaper.io