Security Token Offering has gained quite a momentum in the last few years because of the unique attributes it provides to the users, it gives them a better reason to trust the crypto technology and allows them to deal with something that is backed against real assets.
It brings more legitimacy into working this mechanism and make transactions more credible with a reliable distribution system and a sophisticated set of smart contracts. With these indispensable elements, it makes the cryptography more nuanced without involving a large number of investors. The issuers of the coins don’t have to go through various just for sake of following the protocols when dealing with a security token.
As the per report released by Polymath, the total volume of investment in security tokens will reach a whopping $10 trillion by the end of 2020. The benefits that you get out of this particular instrument are unmatched and they work towards the success of all those who are involved in it.
Here are the reasons that make STO a go-to instrument for every investor:
1.Intrinsic Value
When you are dealing with security tokens, you don’t need to worry about their fluctuating value because the intrinsic price is good enough to give you the kind of stability you want. Without impacting the value of the blockchain platform, you can come up with impactful results and get so many advantages:
- Involvement in the management of a company directly or indirectly
- Secured against physical assets and even commodities
- Can function like a share or any other company property
- Commitments for credit
- Payment of dividends
Everything included in the working of STO is real and valuable as well, the involvement of different markets actually brings better results for every single investor in the domain. It actually brings results that you cannot simply neglect and have to consider without giving a second thought. The achievement of goals is another thing that can be easily done sans any difficulties or loopholes. And when we are counting on physical assets, it is very important not to falter around different items, therefore, we get more particular with this instrument.
At the end of the transactions, security tokens emerge as a vehicle that paves the way for bringing more automation in this domain. It gives an unmatched level of support to every entrepreneur who wants to expand the base of investors without increasing the cost.
Furthermore, it ensures that the production of tokens is never stopped and you get a ceaseless supply. The benefits are endless and one can easily reckon the performance of the campaign with the additional tools. From the perspective of business, it is actually easier to convince the audience and generate leads without any issues with payment or development.
The intrinsic value always remains intact with:
- A large number of dividend options like FIN, LXDX, tZERO, etc.
- Platforms that make assets more accessible such as CEDEX, Orebits, Tether
- By making shares more adaptable with LupusCoin, HFBB, MET, and DESICO.
- More Legitimate
In the name of ICO, we have seen many scams happening and STO is definitely a better option that brings more legitimacy into the process. It is a more reliable method of raising fund and startups get more a regulated approach with this instrument. It creates a big impact on crypto users and investors who need more assurance of security and profit too.
To understand this better, we can take examples of CarrierEQ Inc. and Paragon Coin Inc. which were launched in the month of November 2018 almost at the same time. They both carried out an illegal fundraising campaign by selling the security tokens to the investors sans following the process of registration. According to the SEC, they were supposed to do:
- Registration of tokens as per the securities act 1933
- Sharing the reports of the annual activities with the SEC
- Payment of a fine of US$250,000
- Payment the compensation for the damages to the investors
This is one of the many incidents that forced the investors to doubt crypto-based investments. In the same year, the SEC sent notices to 80 ICO owners asking them about the adherence to regulations. ICO Centra was among these campaigns and some members of its team were even arrested.
When fundraising is done with STO, the investors don’t need to worry about losing the tokens because they have considerable value and scamsters will not really opt for it. In addition to that, it adheres to all the rules and makes things more credible for every single prospective investor. Not just the initial phase of transactions but the very end of it is also sorted with this instrument.
It emerges as the most credible process that does not leave a loophole and reduces risks to a greater level. The regulations are well-defined and their adherence is also unmatched, you also get to be more successful in with expandable models for taxes and fiscal norms. It is possible to prepare a whitepaper that focuses on this niche and makes your projects friendly with the market of security tokens.
- More Transparent
From registration to the launch of tokens, you can transparency at every level and it gives benefits to as many investors as possible. It also helps in securing the information of the company and streamlines the financial structure sans incurring a huge cost. For any investor or an enterprise, it is possible to induct a high level of professionalism with better inputs and more expansive measures.
While choosing this instrument, you need to consider the following:
- Capital accumulation by the companies responsible for issuing tokens
- Polarization of investors from fake crowdfunding campaigns
- Establishing a code of conduct in the market that could be followed by every investor
Affiliation from the SEC should not take as the guarantee of profits but it assures you that you are putting your money into a genuine business. Also, it secures the rights of the investors and enables them to take advanced steps, it brings some serious efforts to stop the fraud and succeeds in doing so. It offers stability, control, efficiency and assurance of profits in one fine stroke.
- Increased Liquidity
No investment is profitable if it fails in bringing liquidity and security tokens do this job perfectly with the right implementation of blockchain. It creates tokens in a way that you can liquidate all the assets including real estate, commodities, movable assets and pieces of art as well.
The way this instrument works makes the investment very easy, it gives you a chance to deliver more tokenization and digital certificates get integrated sans any technical hassles. Once that is done, you can easily sell the tokens among countless investors who look for a reason to enhance their profits.
If you want to see an example of the vast scope of STO then refer to Leonardo da Vinci’s painting “Savior of the World”. It was sold at $450 million was used for creating 1 million security tokens that were distributed among a great number of investors. If you just buy one token of it, you would become a co-owner of this precious painting and in the same way, you can co-own property of million dollars in Manhattan where this instrument has been secured against a property as well.
You might compare it with other instruments of investment but you get to see the true potential of crypto technology with security tokens. The inclusion of real estate and other commodities in this domain gives more assurance of profits and it also delivers a more anticipated response to the crypto holders. It gives them a credible source that simply transcends all the limits of the crowdfunding methods.
There are various cases available make the sense of ownership clear to the participants and if you still lack clarity, you need a more decentralized mechanism to understand the basics. The reversal of policies and their objectives are defined in a comprehensive manner when you get into this business model.
The selling of condominiums in Manhattan using an STO became very popular and it helps in the occupancy as well. According to the reports, the properties are worth US$30 million and when they are sold through a blockchain network, the procedure of buying and selling becomes more trustworthy for all the participants of the process.
If you are interested in bankrolling venture capitals, then there is no better way than this one, it keeps you one step ahead with better tokenization and makes the capital easy to achieve.
- Ability to return/recover
The users of cryptocurrency know that once the token is sent to a wrong address it is then impossible to recover them. But with security tokens, it is possible and that happens with the help of the verification process which every wallet user has to go through before executing the transaction.
With such sophisticated actions, it is possible to trace the coin and to retrieve it as well. However, you will need the help of an expert in doing that because the functionality requires some knowledge of the decentralized distributed ledger. This also helps in the elimination of fraud on both sides and gives you an opportunity to make the most of peer to peer and smart contracts. You can sell your business fast and make it an alluring option for every single investor out there.
While conducting the crowdfunding campaign, you might come with some security issues such as the issuance of certificates and providing affidavits. To tackle these issues in real-time, you must have a blockchain platform that gives more value to the validity of regulations.
Whether it is a blockchain platform or something else, you need to be clear about the motto of your project and that is to establish the brand in the market. The adherence to the KYC/AML regulations plays a pivotal role in that and facilitates the registry for identifying the investors. It also helps in the instance of losing an asset or something else because of the procedure that is comprehensive and subtle as well.
For making an STO campaign successful, you must be associated with a company that has experience in the development and marketing of this ingenious fintech solution. With the help of Technoloader, you make it possible and turn this initiative into a booming success. We make sure that your offering could reach every single investor and it could establish its name in the market without a huge cost. When we work on a security token, we make sure that it delivers a higher level of reliability to the investors. We make your project ready for any task and make the results more positive so your startup could reach the zenith of its domain sans any obstacles.
