Well, as Pomp says, The Virus is Spreading
Hey, Sup?
Well, 2018 has truly been one of the crypto winters for investors, traders. But, even in the this crypto winter, we saw a very interesting trend in the form of Security Tokens.
Initially, even I would have ignored it as just another thing which they say on Crypto Twitter. But, recently, I saw some interesting headlines in my RSS feed.
- Electric Scooter Startup Spin Seeks $125 Million In ‘Security Token Offering
- Overstock.com Blockchain Subsidiary tZERO Security Token Sale Launches(Yep, I know this is from December)
Along with all this news, the two major security token platforms which ICOed this year are also the most talked about offerings of this year.
But why?
What’s really about security tokens that make them so exciting that even non Blockchain companies are adapting to them? Will they be the first sign of our economies becoming tokenised economies?
Well, to define a security token, A security token represents traditional, private security interest. It could represent a share in a company, an LP interest in a fund or a trust, a member share in an LLC. Essentially, this is like issuing ownership shares of a company on Blockchain.
But, we already have a “Wall Street”, do we really need something like this?
Well, for one reason, Security Tokens are easier, faster, and cheaper to transfer from one token holder/investor to another.
The best analogy is the transition from email to simple post. Earlier, we used to write a letter, put it in an envelope, address it, send it, and wait two to three days for the other party to receive it. But, today, you could just send an email. The content is the same, but by using internet, you can send it faster, cheaper, and easier.
To put all this in context, you could have the same investor agreement or certificate on paper. It’s the same thing, but now due to ease of use, so now you can issue it and trade it, cheaper and easier.
It won’t be wrong to say that tokenisation of securities will be the first step in evolution of our economies.
So, what lies ahead?
Security tokens are going to be a bridge between the traditional finance sector and blockchain and benefit both equally. This is because the assets divvied up via tokens already exist in the traditional market – even the biggest markets like public or private equity and real estate. Many blockchain projects now have platforms that directly undercut the old ICO model by tokenizing equity rights for pre-IPO companies,
Legal Scenario?
Well, this is the best part. Security Tokens are financial securities compliant with SEC regulations. So, You can relax on that end. 😀
How can you do a Security Token Offering(STO)?
Yes, they actually made a term for it. There are some players which will help you create a security token for your company. Some notable players are Polymath, Harbor, and Swarm Fund.
Hi, I am Ankit. I am a professional looking to work with Blockchain Startups across Product, Marketing and Content.
If you’re a Blockchain startup looking for help in above areas, drop me an email at [email protected]. Or you can just DM me on Twitter. 😀
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