What makes an investor a winner in the pool of competition? Their smart move.
A smart move defines the investor strategy.
A winning game
To have the edge over competitors, investors need to turn the table of the game. They believe a perfect market player always invests in profitable projects.
What’s the mystery behind the achievement of the great investors? Their success key is to place a big and safe bet to play. Security plays a crucial role in investment. Isn’t it? Investors can take a leap of faith in STO (security token offering).
Ready to get abundant benefits of STO. Stay connected to increase your cup of knowledge about Security token offering.
How STO is the game-changer?
Three years back in 2017, ICO (Initial coin offering) was booming. Most of the people have generated a high revenue by investing in ICO. The leading and influential way to raise funds for the cryptocurrency entrepreneurs and founders.
But have you heard if good is close than bad will soon approach you? That happened with the investors, ICO had trapped them badly in the vicious circle and stole millions from people.
Finally, the law and authority gave birth to STO ( the safest type of investment that provides ten times more security than ICO. The golden opportunity for investors. The security token development is a safe haven for the investors as well as the companies.
In this blog, you will get to know the five significant benefits of STO. The investor will surely explore STO as an investment vehicle.
Say goodbye to middlemen
What is the biggest hurdle in investing in the stock market? You have to take advice from a broker-dealer. Right?
Sometimes a long communication with intermediaries becomes tiresome and time-consuming. We need to pay massive bucks for their time and services. Isn’t it? By investing in STO, Investors need not have to deal with intermediaries. Without weeding through advisors, they can invest in security tokens.
Real Value
Often Security tokens are mixed up with the utility tokens; however, that is not the case. Utility tokens in most cases are designed specially to enable access to a service or product that already exists on the blockchain platform, having no other valuation in their own right. On the other hand, security tokens are an actual financial instrument that designates the token asset. Similar to any prevalent traditional market instrument, the security token may grant rights in:
- Direct or indirect assistance in the administration of the company
- Dividend payments
- Financial commitments
- Profit-sharing
- Virtual or physical assets ownership
Enhanced Credibility
More than often, STOs are referred to as “the new version of ICO” which is not valid. ICO is a fundraising approach via the application of cryptocurrency, which can be a source of funding for startup companies. The principal issue with ICOs and the primary concern for the entire crypto market is a lack of regulation.
Consequently, no investor protection mechanism is in occupation. Lack of regulation has previously resulted in the loss of billions of dollars by investors. It encompasses both assets stolen from centralized crypto exchanges and fraudulent ICOs.
The fact with Security Token Offerings is totally different as security tokens are managed as “Tokenised Securities” by most of the regulators that have a certain form of crypto regulation in position.
Therefore the same traditional securities laws apply for security tokens. This implies that a firm that issues security tokens has to comply with all applicable securities regulations thoroughly.
Programmable Compliance
In the case of traditional securities, laws can differ over asset class and buyer/seller/issuer jurisdictions, the similar are applicable for security tokens. However, when securities are tokenized, compliance becomes automated.
It means that security tokens may then be traded anyplace where they are judged as being compliant.
Blockchain technology and smart contracts make it feasible to incorporate ownership and regulation instantly into a token which means that the smart contract will be able to execute, regulate and govern the token.
For instance, Security Tokens can be programmed to confirm who can purchase them and therefore restricting Security Token holders from transferring (i.e. buying or selling) them to a non-eligible counterparty.
