There are numerous motives pertaining to the reasons why the digital revolution has become huge and used in almost all firms and industries. However, digital transformation is so important to the point that it’s no longer a choice for businesses – it now serves as a means of survival. That said, blockchain technology invention make boasts of being the reason behind the transformation and notable changes in the way businesses functions.
According to their official website, security tokens are real-world tradeable assets, that have been digitally characterized on a blockchain platform.
For the sake of those who aren’t familiar with blockchain or cryptocurrency, I’ll still break it down to your understanding.
In layman terms, security tokens could be seen as financial assets which include; notes, bonds, warrants, debenture, options, and shares (stocks). These tokens are mostly used by companies and government (in developed countries) as a means to gather money from all financial sectors like capital markets and investors. Thereafter, the company or governments promise a return-back-programme in the form of interest rates or dividends to the lenders.
Since all these activities are carried out through a cryptographic token, it’s now safe to call this action a “security token”.
In truth, holders of such tokens are vulnerable to legal entitlement such as; debt securities and voting. These rights give them a stake or interest in whatever asset the token portray. Security tokens come with different stakes, it could be; a stake in a company, precious metals like gold or silver, or it could even be a cooperate bond. What security token does is that; it unites components of traditional financial instruments with that of a highly innovative digital world.
Also, since these tokens are considered as security, it’s then safe to say that they are subject to government securities and regulations, and as such; they must meet up with the provided regulations in order to be legally approved.
No doubt, these tokens might end up being the next big mega-trend of the blockchain reconstitution. At this point, it’s essential to reveal the other tokens that have been in existence before the arrival of security tokens. They include the following below:
• Cryptocurrencies
• Utility tokens
• Smart contracts
• And then Security Tokens.
Liquidity:
Security tokens will enable more liquidity to the crypto space considering the fact that it enables fractional ownership as well as reducing minimum investments. This is because as more and more people are purchasing smaller stakes, those other digital assets that aren’t liquid, or difficult to (re)sell will be able to increase their liquidity on the blockchain.
Security tokens have everything it takes to replace numerous inadequacy in the financial sector. I’ve outlined five benefits of these disruptive token below:
- Security tokens will help in the reduction of costs by erasing huge parts of the back offices our traditional bank needs.
- These token will cut down complications and paperwork with managing securities (such as; writing of funds, collecting signatures, etc.)
- Lessening fees by eliminating middlemen and brokers from investment transactions.
- Empowering real-time settlement among buyers and sellers which will also lead to less settlement risk.
- And lastly, these tokens will enable accurate and fair assets estimates due to the free and competitive market.
With the solitary power of blockchain technology, security tokens will provide a uniform technique in terms of tracking and verifying information and ultimately averts damage as a result of its immutability.
Having all these peculiarities in place, it then becomes the perfect framework to record ownership of anything in a transparent manner. This singular act will avert manipulation, fraud, and arbitrage.
Crowdlitoken is the world’s first security token that adjoins the benefits of direct and indirect investments in real estates. The platform allows token holders to modify their own portfolio by allocating their tokens to the available hand-picked real estate investor. Interestingly, there is no minimum investment, this connotes that investors can invest as much as they want either with fiat (EUR of CHF) or cryptocurrencies. Crowdlitoken assures holders of this token a decent interest returns on their real estate investments.
In truth, Crowdlitoken will offer investors enormous opportunities for those interested in high-quality real estate assets. This will be done in an easy, lenient, flexible, elastic, and secure manner.