Sat. Jul 11th, 2020

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Top 5 Benefits Of Security Token Offering

3 min read

There is a 90% drop in the number of people who invest through Initial Coin Offering (ICO). The reasons are fraudsters, exit scams, lack of regulations, and pressure from several government agencies like SEC. But, some strong alternatives like Security Token Offering (STO) have come to build the investors’ confidence.

Security token offerings are a modern way of trustable fundraising method which would replace the traditional IPO method. It is believed that crypto coins and tokens gain the confidence of the investment market and will see a serious shift with the development of STO. As government agencies back STOs, it becomes a reliable investment option than ICO.

STOs are an opportunity for everyone to a more accessible, affordable, and secure way to invest in an entity. If you are the entrepreneur or startup who wished to offer a Security token? Get expert consultation from Blockchain App Factory, an experienced STO development company, which also offers various other blockchain-enabled services. 

 Let’s see the top 5 benefits of Security Token Offering:

VALUE:

Security Tokens are often mistaken with Utility Tokens. Unlike utility tokens, which provides exclusive access to service or products in the blockchain network and do not possess any other value on their own. While security tokens are financial instruments which designed token assets, that gives ownership rights to:

  1.  Company Property or Share
  2. Dividend Payments
  3. Credit Commitments
  4. Company property or share

MORE LEGITIMACY:

STOs are most often misinterpreted as “updated versions of ICO,” which is entirely wrong. Fundraising through ICO via the use of cryptocurrency is like sourcing capital, in return for pre-sold rights to access the service when the product is ready.

The key issue with Initial Coin Offering is the whole atmosphere lacks any regulation and no protection to investors and the investment made.

But it is not the case with STOs, some form of guidelines completely regulates it. It is a Tokenized Securities and some traditional laws applicable to that. It means all companies that apply for STOs should comply with government rules and regulations.

24/7 MARKET ACCESS:

All the traditional exchanges and stock markets are tied to strict pre-defined working hours. Even when any important matter happens when the market is closed, none can make a yield out of it.

But Security tokens are available 24/7. So, one can trade assets round the clock and have a chance to any new updates or events in a timely manner. 

TRANSPARENCY: 

Blockchain technology provides a decentralized and uniform method of data tracking data and tampering with it due to its immutable ledger. This infrastructure helps to store the ownership of securities in a fully transparent and secure way.

MORE LIQUIDITY:

Blockchain technology helps to divide the traditional illiquid assets into asset tokens and these tokenized assets, such as art, real estate, or old monuments. Tokenization provides property access to average investors on big projects, which were traditionally owned by the people with large capital.

CONCLUSION: 

Security Token Offering is growing in popularity among young startups and becoming an interesting alternative to traditional IPO and crowdfunding. STO offers a quicker, cheaper, and more flexible way to raise necessary funds for project development.

If you are the entrepreneur or startup who wished to offer a Security token? Contact Blockchain App Factory now for quick and reliable service.