January 6, 2021

STOs as an opportunity – In interview with Bernhard Blaha

Security token offerings could become the next big use case for blockchain technology. Yet, the regulatory aspects are still a critical issue that can be handled differently around the globe. Additionally, there is the question of whether the different blockchains might not end up creating Babylonian conditions if they do not ensure interoperability.

In an interview with Bitcoin Kurier, Blocktrade CEO Bernhard Blaha shares his perspective on the topic. You can read excerpts of the interview here. The full version is available exclusively on the Bitcoin Kurier Podcast (German only).

Marcus Vellmer, Blockreporter: Many projects were able to finance themselves via ICOs in 2017. Now the press is almost in agreement that STOs are replacing ICOs. What is characteristic of an STO? What advantages can they offer?

Bernhard Blaha: In summary, STOs are safer than ICOs in comparison. However, a limited distinction must be made here between individual projects. It depends very much on the details. Some projects could not have been implemented as STOs at the time, and on the other hand, there were also projects that could not have been implemented as ICOs.
In each individual case, it always depends on the jurisdiction in which work is being done and the content of a project. For the investor, the most important question is what details are behind the project. So the actual medium is much less relevant, because there can be something just as grandiose behind an ICO as behind an STO. However, if I had the opportunity to invest in the same project in an STO instead of an ICO, then I would clearly prefer the STO.
Basically, I then have a security in place, which is very strongly monitored by regulators. A lot of due diligence has to be done here before this step can be taken. In this case, the regulatory framework protects investors to a much greater extent than in the case of an ICO.

Robert Steinadler, Bitcoin Kurier: Many different cryptocurrencies are trying to capture STOs for themselves. A variety of blockchains are competing with each other in this regard. Which blockchain is making the race? Is there such a thing as an optimal platform?

Bernhard Blaha: I wouldn’t say that there is an optimal platform. But there is a clear winner, and that is the consumer.
This market is changing so quickly and so strongly that we will always see players who successfully combine positive developments and make them available to the consumer in a bundled form.
It is almost a religious battle between the individual blockchain projects, for the higher transaction speed, the lower power consumption or the better privacy. These are all good arguments, of course, and important because they are different approaches. So it doesn’t hurt if different players end up driving the basic technology.

Robert Steinadler: That’s the advantage of the consumer through the competition of ideas. But where do they see the advantages and disadvantages for companies? If blockchain projects are not interoperable, isn’t the question which one to choose?

Bernhard Blaha: Of course you have to think about it. But here, too, it depends very much on what the requirements are. Do I need a private or a public blockchain? Do I perhaps need the ability to control transactions for regulatory reasons?
There is no one right answer in this case. In my environment, I observe the proponents of different blockchains – I don’t want to mention any names here – and in the end they are all right in terms of their arguments. To the outside world, it may seem a bit like chaos, because so many different players want to win the market for themselves at the same time. But it is not, because in my eyes it is evolution.

Robert Steinadler: So in the end you get better products as a result?

Bernhard Blaha: Definitely! The market will sort out some players. In the end, however, there will not be one, but rather several who will offer the optimal product in their respective niche.