ICO vs TGE

The industry surrounding Blockchain technologies, as with most new industries, is littered with terminology and jargon to help savvy contributors stay aloof among the less informed masses – terms such as Tokens, Coins, Altcoins, Gas and Wallets or acronyms such as ICO, TGE, DAPP, FOMO, DOA, POS, DSO, STO and the like are doing the rounds in the hope they become established concepts. Historically, the worst transgressor of TLAs (or three-letter acronyms) is hands down the financial industry – which is wired at its core to keep information encrypted from us mere mortals. Obviously, some acronyms take root faster than others, nevertheless it is still worthwhile understanding the deeper meaning of such descriptive phrases as they often appear interchangeable. The most obvious acronym pairing is “ICO” (Initial Coin offering) and “TGE” (Token Generation Event) – considered by many as having the same meaning.

First one should examine the difference between Coins and Tokens, again some may argue that these two words simply overlap, but let’s dig a little deeper. In general, a Coin or simply digital cash, is a store of value or unit of account that can be used as a method of payment or a medium of transfer much like any form of currency in circulation today. On the other hand, a Token can be a digital asset or merely provide digital access, that may include specific functions or utility which can also be transposed as a unit of value but also acts as something much more powerful. Tokens have much wider use-cases, providing access, certain rights and ownership, privileges, controls or simply a redeemable voucher.

Why is this terminology stuff so important?

Well it comes down to current securities laws across jurisdictions that govern how such instruments can or cannot be marketed to the public. The now infamous ‘Howey Test’ (under the US Securities Act of 1933 and the Securities Exchange Act of 1934) that represents a simple litmus test to evaluate whether certain transactions can be construed as securities and therefore subject to certain disclosure and registration requirements. TGE terminology is likely to have stemmed from the Howey test as a not so subtle circumvention by swapping words to suggest a more ambiguous interpretation. Both ICOs and TGEs may indeed be deemed securities on some level, as both offerings or events involve the transfer of money, however donations, gifts, sponsorship, membership dues, reward cards etc would also fall victim on that basis. Whilst regulators prefer clear-cut answers, the Blockchain phenomenon is breaking new ground and making a valuable contribution to society – it should not be judged off-hand based on prohibition-era legislation.

Kambio is looking to remold capital markets and take blockchain technologies into mass adoption

At Kambio Ventures, we recognize the importance of combining technology and regulation as it serves as a necessary framework for best practice and springboard for mass adoption. Whilst not all regulation is de facto good, the underlying principals i.e. to protect consumers and maintain the integrity of the financial system, is of paramount importance and should always be respected and adhered. 

Kambio is building a fully-regulated investment platform and digital security exchange dedicated to start-ups. Whilst some in the crypto community will benefit short-term by skirting regulations from outside the financial system, we prefer collaboration from within. Our value proposition considers both technology and regulations equally, as one without the other will lack sustainability and ultimately not in the best interest of consumers.

Kambio advocates any new technology that helps enable a better and effortless user-experience, however we do not subscribe to new terminology or clever acronyms for newness sake. Our business is simple, we digitize securities within a fully-regulated investment platform and exchange, making venture capital universal and liquid, and investing more simple, seamless and secure. Most investors already interact with digital securities every day, to the extent that they can review and trade a digital representation of a security within a brokerage or custody bank account. By making the underlying security digital as well, investors can make their whole investing experience equally simple. 

Bricks vs Clicks

We recommend you avoid unnecessary jargon. Digital securities are a natural evolution from paper certificates, both in effect represent fractional legal ownership of a company or asset. Whilst the technology behind digital securities will indeed have a profound impact on the capital markets industry, it does not need to be defined as a new asset class or a so called paradigm shift in ownership. It is simply a better form of security that provides enhanced customization and multiple benefits for all stakeholders. 

By Louay Aldoory (Co-founder & CEO at Kambio Ltd.)

Kambio Ventures is building a fully-regulated, blockchain-enabled investment platform and exchange for start-ups and high-growth SMEs. A membership-based global marketplace that will help unlock shareholder value, raise essential growth capital and enable exchange liquidity at a fraction of the time and cost of traditional capital markets. Kambio.io