It has been a while since ICOs became a prominent method for raising funds for your business. However, the utility tokens have been used for quite a few scams and this unique method is now losing it luster. It would not be wrong to say that security has become the major loophole which has taken a toll on this instrument. There are several projects which were introduced just to dupe investors and most of them were successful as well.
A better instrument for the investors
But the technology evolves itself and it gives a solution to every issue. Therefore, we now security tokens which are safest for the investment purposes as they are backed against assets. It has been quite some time that Security Token Offering (STO) made its appearance noticeable. Its usage is also increasing now as the investors are finding it more suitable and safer. The fact that it is secured by assets makes it intrinsically more valuable than a utility token.
That’s the reason, security token exchange development is increasing worldwide. Security tokens provide an overall safer mechanism to the crowdfunding projects. They help the project owners reach a bigger number of investors since these tokens can be trusted by anyone. The very basics of this token secure the interests of investors. The value of these tokens is already high when they are launched that rules out the involvement of scammers.
More reliable and far-reaching too
They do it only with the utility tokens because they can be created with least expenses and they can also be sold independently without involving an exchange. On the other hand, there is a significant cost involved in the development of security tokens. Technically, they are created in the same way but their affixing to an asset makes them costly. This attribute makes them out of reach for the scamsters and assures investors that their money will stay.
How significant is the Security Token Exchange for future traders?
The second thing which ensures investors of not losing their money is the inclusion of exchange platform. This means that the project owner is not independently selling the tokens, it is conducting the crowdsale with an exchange platform. In this case, an exchange gets to keep all the tokens unless they are sold out or burnt. Under this type of campaign, an exchange becomes the guarantor for the investors and makes sure that the project is genuine.
Do it with an industry expert
There’s a whole process of verification post which, an exchange agrees to release the tokens of a project on its platform. The project owner has to share a reasonable amount of profits with the exchange as well. It is not that every ICO project is a scam investors should refrain from investing in them. However, there is no way to ensure the authenticity of the projects and there is no way to retrieve your money once the token issuer disappears after selling the tokens.
Therefore, the security token becomes a better choice for investors as well as entrepreneurs who want to ensure that their vision turns into a reality. But it cannot be achieved without the help of an expert who knows the development process and legality both. Security tokens are also regulated by various acts of SEC, thus, you need to ensure that you hand over this job to an expert. Coin Developer India is one such company that helps you build your venture.
