Most investors and enthusiasts of digital economics are already well acquainted with the fairly new element of cryptocurrency — token. However, a derivative of this element, token sale, may complicate even certain experts.

So what is a token sale? A token sale is a tool that allows the attraction of capital using blockchain capabilities. This method of attracting funds is much more efficient than current financial instruments, as the procedure takes far less time while, at the same time, making the deal more transparent. Essentially this form of investment is not particularly different from typical financial instrument trade: an investor purchases a token, hoping for an eventual growth in its price. The main difference between tokens and securities is the following: the investor makes an investment at a very early stage of the project, sometimes prior to the product being released on the market. Due to investments being made this early on, tokens are considered high-risk targets for investments and are mostly suited for investors with an aggressive portfolio.

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Why did we choose token sale and what are the advantages?

The world of cryptocurrency seems confusing and non-transparent to many. Perhaps you have heard from experts or read somewhere that a token sale is a new phenomenon in the world of cryptocurrency. That is not so. Ethereum protocol token sale is one of the most well-known examples of a token sale, which has lead to a successful project, the price of which continues to climb today.

Tokens are a new high-yield financial tool, which is already starting to gain parts of the market previously occupied by traditional investments. However, as many representatives of the financial industry note, the market of tokens may be complicated for investors: one needs to have good understanding of blockchain technology. Furthermore, the market does not have a strong presence of regulation — risks of fraud remain.

As a means of protection, protocols and “smart contracts” were created. A smart contract using the Proof-of-Asset protocol greatly decreases the probability of fraud: in the event of one of the sides of the deal breaching contract, the smart contract will automatically block the fraudulent element from receiving money. The goal of such a protocol is identical to quality standards utilized by traditional markets: to get rid of informational asymmetry. At the same time, the protocol maintains all the advantages of cryptoeconomics: high speed, low transaction costs, use of new technologies.

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What is the concept behind token sales?

Regardless of whether a company uses its own token for the token sale or conducts a token sale directly into a protocol (which can be utilized by other startups or projects as well), the price of tokens is determined through trading on crypto-currency exchanges.

The true capabilities of a token sale lie in the emergence of a new sphere of capital attraction, where startups and technological projects are able to receive direct financial support from investors and like minded people. This resembles investments by venture funds and angel-investors, but the time and expenses it takes to form a deal are both lowered.

How to play your part?

Trading for tokens is done on blockchain, so any person taking part in trading should prioritize experience and knowledge of the risks.

Currently many token sales, including the upcoming BANKEX token sale, are launched on Ethereum using the ERC20 standard. This smart-contract standard ensures a strong consensus, further reinforced by this token’s security measures, which give it additional reliability.

It’s not unlikely that, after some time, token sales will become the main method of attracting funds for startups and technological companies. Stay tuned to BANKEX updates, as we will soon announce the starting date of our token sale.

Finally it’s worth mentioning that, regardless of the project or expert in crypto, the token sale should not be the end goal. The opinion of BANKEX is that a token sale needs to be backed with a strong technological solution, such as the one presented in the BANKEX White Paper. BANKEX is still working on the legal issues of the token sale process.