Security Tokens have been the talk of the hour in last few months in crypto and blockchain industry. But why are investors so pumped up about the security tokens? Why people think security tokens are the future? What are the benefits of security tokens?
In this article we will discuss about the five benefits that security tokens bring to the industry. If you have doubts about what are security tokens and want to learn about them in detail. Read our detailed article on security tokens here.
So, back to the benefits of security tokens. Following are five ways, how security tokens will revolutionize traditional market.
At present the ICO space seems to be a little shady. With tons of fake ICOs in the market and no regulation to stop such things has decreased the credibility of ICOs. There is lack of accountability. With the introduction of security tokens, the firm becomes accountable to its investors and their falling under the regulation regime minimizes the chances of scam and thefts.
Increases Execution Speed
In the traditional financing system, the process of different tasks is slow and hectic. It includes a lot of middlemen which adds to the time of execution. Traditional financial transactions can be a little expensive because of all the fees associated with the middlemen like bankers. Security tokens are set to lower the dependence on middlemen and make all these tasks easily accessible.
Because, of less hectic procedures, security tokens are set to be more attractive options for investors. Security token offerings (STOs) combine the features of ICOs with IPOs in order to provide a perfect balance between gaining access to capital at a low-cost and also remaining compliant to securities laws side by side.
Also Read: Top 5 Security Token Exchanges
Traditional investment transactions are extremely localized. In easy words A Russian investor finds it hard to invest in private US company or vice-versa. Security token are set to change this. By using security tokens, the issuer can market its deal to anyone on the internet. This increases asset valuation and in turn also leads to huge number of investors. Because when the issuer company can reach anyone on the internet its investor base will increase exponentially and will no longer be limited to a particular place.
Less Manipulative Market
As the number of middlemen and third parties will gradually decrease with the arrival of security tokens, the chances of manipulation and corruption by financial institutions decreases to a great extent. In future, security tokens will use smart contracts for automating different functions which will further minimize the chances of errors and involvement of third parties.
Secondary token trading will be made easy with the launch of licensed security token trading platforms like tZERO. This will make it very easy for investors to liquidate their security tokens. The current procedure in the share market is quite lengthy and time consuming.
At present security token market share is very less as compared to utility tokens. But the coming years will most probably bring the time where security tokens will be embraced. It is expected that tons of capital from wall street will flow towards security tokens.
It will be interesting to see what the future brings!