In 2017, we witnessed a boom in ICOs which initially targets the Crypto market. Many projects raised capital using these Initial Coin Offerings, but many scammers also jumped in to pollute the market, and as a result, investors lost a lot of money.
Later, SEC and other law enforcement authorities interfered with regulating the market, and since then, ICOs are doing just fine. However, now we have a better mean for investments and fundraising, which is Security Token Offerings (STOs).
The companies use STOs to raise investments from individuals and big investors by using the concept of Tokenization. Nevertheless, the STOs market is fairly new and not many people know how to invest in these tokens.
Before you jump onto crypto exchanges to buy random tokens, you must have a roadmap and the required knowledge to start.
STO Investment Process
We can invest in STOs by simply signing up and verifying our accounts on Security Token Exchanges, but here are a few things to consider before you make your final investment decision:
- You should understand the concept of STO and how these tokens are different from IPOs or ICOs.
- In this step, you need to shortlist those STO tokens that seem to be backed by a solid project.
- Do your research on shortlisted tokens and, especially, read their whitepaper.
- Analyze their previous performance and do some research about the team behind that project.
- Go to an STO exchange and make your desired investment.
- Keep tracking your investments and stay updated with the news incoming from project handlers on different social media channels.
Every investor should consider these essential points to prevent any fraud or bad investments. You can also do a detailed technical analysis of your selected token to predict the future valuation of your token.
Who can Invest in STOs?
Security Tokens are traded globally, and there are no border restrictions for any country except those where STOs are currently banned. The whole ecosystem of STOs lies above the blockchain. Blockchain ensures the safest transactions with almost zero risk of manipulation.
So, anyone with an account on a Security Token Exchange can invest in their favourite token. Unlike ICOs, this infrastructure is fraud-proof and transparent. Also, there is no limitation of how much you can invest in a certain token, the market is open 24/7, and you can sell or buy more tokens at your own will.
Creating STO Exchange Account
First, you need to find a reliable exchange which you can invest in your researched tokens. Your selected exchange should be verified, regulated, and trusted by users to keep your investments on a safer side.
The next step is to sign up for an account on that particular exchange, Please note that every exchange has different verification criteria; some of them will demand your National ID, while others may let you in simply with your email address and phone number.
Also, all of these exchanges have separate layouts where users can track their investments with ease. Some of them provide intuitive investment interfaces, while other platforms might have an advanced and complex interface, so it is important to choose accordingly.
STO Investing Benefits
We can say that STO is a much safer way to invest in different projects and startups because it covers most of the loopholes that we see in ICOs. This investment option has a list of its own benefits that are attracting many new investors.
Highly Protected: Investors’ protection is ensured while trading security tokens due to highly strict regulations. All platforms must abide by these regulations to provide investors with their required protection.
Affordable Option: There is no middleman between you and your investment except exchange; these exchanges charge a minimal fee if we compare it to other investment options. Moreover, investors can easily deposit small amounts without an issue.
Easily Tradeable: There are no date and time restrictions on your investments; you can trade tokens at any second of the day without any issue.
No Boundaries: You just need an exchange platform where you can deposit your initial capital or the amount of money that you want to invest in that STO token. Moreover, there are no limitations on countries or locations, so anybody can invest globally except those countries where Crypto is banned such as Vietnam, Bolivia and Russia.
STO is thriving really fast, and new exchanges are being formed to regulate the investments. Many big crypto exchanges such as Binance also recently signed MoU with Capbridge Financial to build an STO partnership. However, with all the perks of this investment option, many big investors might lean towards STOs in the near future.
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