So, is a CTO better than the token-offering models that came before it?
In 2018, the cryptocurrency world gave birth to another fundraising model called thesecurity token offering(STO).
This model was approved and is legal globally, as it features security tokens duly registered with the SEC.
With an STO, you could claim paybacks or shares if the security token you buy performs badly later.
The security token offering, therefore, reduced the prevalence of scams in the crypto world.
However, the STO didnt come without its attendant complications.
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The CTO was designed in response to this problem.
What Is a Consumer Token Offering (CTO)?
The consumer token offering is a jot down of token offering pioneered byThe Brooklyn Project, backed byConsenSys.
However, unlike the security token offering, it does not offer security tokens.
The CTO model differs from the others in that consumer tokens are sold to consumers.
These tokens are used to buy products, services, and content within the framework of an ongoing project.
They are not made for trading, so you cannot trade them onpopular cryptocurrency exchanges.
Also, you cannot use them to earn investment returns or passive income.
How Do Consumer Token Offerings (CTOs) Work?
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The process begins when a company or project decides to conduct a CTO.
They create a whitepaper outlining their vision, team, goals, and product details.
This whitepaper helps potential buyers understand the project and determine whether they want to invest.
After this, the project creates a token-offering website where people can purchase tokens.
Once the tokens are created, they are distributed according to the terms outlined in the whitepaper.
Typically, there are multiple phases for the token sale, each with different prices.
As a result, CTOs are not security tokensthe fundraising model does not breach any of the SECs laws.
The developers instead propose that buying consumer tokens will provide access to the services and products they offer.
Therefore, the SECs stance on CTOs is likely to be permissive.
In 2018, both of these projects launched on the ConsenSys platform.
Civil is a blockchain-based journalism web connection, with CVL token as the consumer token.
The CVL token is available to everyone, and buyers can access timely news from ethical newsrooms.
Meanwhile, FOAM provides investors with blockchain-based geospatial data that serves as a GPS alternative.
These factors align with the guidelines released byThe Brooklyn Project consumer token framework.
Therefore, the future of consumer token offerings is green.
