When we talk about blockchain and cryptocurrency, the first thing we refer to is security due to its decentralized mantle. However, when the crowdfunding became bigger than expected with utility tokens, the security aspect of this technology started dwindling. And that happened because the creation of utility token become easier and cheaper. As a result, many projects succeeded in swindling thousands of crypto investors who are not yet able to recover their money.
Therefore, the U.S. Securities and Exchange Commission (SEC) had to intervene and now we have an all new concept which is much safer. A security token is a digital token which is underpinned by securities and they adhere to SEC regulations. It makes them hard to get because, in order to launch these tokens, you have to secure each one of them against assets. The result is very beneficial for investors who look for a more secure instrument to rely on.
Related: How much does it cost to develop Security Token Offering (STO) ?
Technically, there is nothing different between security tokens and utility tokens. However, the intrinsic value of the former is higher than the latter. Moreover, they provide a more compliant structure which could be adopted in any financial system. The regulators also favor this token because it secures the interest of the investors without putting a single dollar on risk. Therefore, security token offering becomes a better vehicle for you to invest and it is definitely going to take over initial coin offering. With this methodology, it is possible to get better solutions to all the issues that token holders face every now and then.
Ownership of Assets
With this token, you get full ownership of the asset and it also helps hold the value. Under the environment set by this token, you can build a better ecosystem. Security tokens are associated with real-world assets and they have their own value. Dealing with this token gives you much assurance about commodities and goods. Its value is pegged against some or the other asset and the optimal value is also increased. Thus, you get a better option to deal with and revenue sharing also gets straightened for a long-term. The development of these tokens involves plenty of legal consultation and gives much better options.
Compliance Integration
The rules and regulations change as the geography changes around it. That makes the process of releasing the tokens a little different as norms change in different countries. Before you can think of launching your own security token, you need to check which country is it that you are going to launch it from and where else you are planning to sell them.
Full Traceability
This is another aspect of security token that makes it more likable. They are created on a blockchain network and are fully traceable by all means. They have all the essential features of a coin that has been created by a decentralized distributed ledger. They instill transparency into the transactions and help you ascertain the right value of your coin. It takes your trading to the next level by deploying the appropriate resources in their place.
Reliability
With STO, you get higher reliability which is not delivered by any of its counterparts. It is approved by the SEC and fully adherent to every regulation. Security tokens take the level of credibility much ahead and grant you the security that makes the best of this technology.
The positive impact of Security Token Offerings
There are many other advantages of using a security token offering. It is a better choice for the entire market and delivers results which are streamlined for every individual dealing in cryptocurrency. There is something for everyone:
For institutional investors-
- A fund-raising model which is compliant to regulations
With real estate, commodities, automobiles and more, it is a better way to tokenize assets.
For retail investors-
- Greater fractionalization with the inclusion of venture capital funds and real estate.
- Possibility of investment into bigger assets with a meager amount.
- The low-cost model ensures a nominal fee on transactions.
For cryptocurrency enthusiasts-
- You can directly trade with them using credit cards or bank accounts.
- Broader prospects for investors.
The uptrend of Security Token Offering
Even when the markets are bearish for crypto tokens, prospects for STO looks stronger. The demand and trading volume of security token is increasing. It is also bringing transparency and accessibility into the market by allowing more users to deal with it. With this method, the transactions have also got swifter and more efficient. It has paved the way for bigger and better possibilities across the globe.
And it has also become easier for anyone to get security token offering development services as their number is growing exponentially. You can also make your project renowned by deploying befitting marketing strategy. It actually makes business very efficient by laying down simpler norms for non-voting rights and gross revenue. And it can also be distributed as a dividend at any point of time.
Security tokens make it easy for you to invest and expect better returns because the entire system of token trading gets overhauled. It gives entry into the secondary markets as well with full equity and better chances of returns. This instrument makes the buying and selling of tokens more fluid than ever, it enhances the value of their assets by consolidating them. It is definitely a better choice for you when it comes to investing in digital assets. With this token, you can give your business a proper structure and increase the involvement of stakeholders.
With the growing number of security token development companies, it has become very easy for any entrepreneur to opt for this medium for fund-raising. With Coin Developer India, you can get developers and marketers who will be making your startup dream possible for you.
