- February 25, 2019
- Posted by: STO Search & Filter
- Category: STO Industry Resources
Security Tokens allow you to hold a security, which means that you get a traditional share of something real. Financing is getting more and more digitized as the days go by. The goal is to get it all onto the blockchain.
Tokenizing security is showing more improvement and progression over the years, which investors can benefit from. This new technology will bring many advances into the world. Wondering what exactly they’ll do and why you should invest early on? Keep reading to find out!
Security Tokens Invite New Investors In
Because these tokens are secure and well-regulated, their implementation is quite widely supported when people understand their advantages. All investors and companies will have the advantage of a more international pool of capital. The number of potential investors is sure to increase, seeing as security tokens can be accessed by anyone with an internet connection, making it easier to access capital markets.
Because scamming is pretty common in the cryptocurrency community, investors are looking for an alternative. When you invest in security tokens, you don’t have to worry about safety. Instead, you can focus on your economic success. Security token sellers usually aren’t as exclusive as other crypto businesses, which means that they’ll open the door of possibility for larger assets to even new investors. Tokenization of assets allows anyone to have a small fraction in a stock, art, or real estate, even if they aren’t ready to take on a large, long-term investment.
Security Tokens Offer More Liquidity for Investors
Because security tokens allow partial ownership by lowering the minimum investment, there will be more liquidity in the market. Since more people will be able to purchase smaller stakes, many assets can increase their liquidity on the blockchain. Also, the security token market is always open, allowing global access around the clock. This provides even more liquidity. For example, if someone has a high-priced asset that they want to cash out, it is a lot easier for them to find investors for a fraction of the price rather than the whole asset’s full price.
Security Tokens Have a Place in an Efficiently Growing Market
There are so many things about the financial industry that are ineffective and need to be improved. Blockchain technology is working on these inefficiencies and trying to make better choices. The tokenization of securities is just one of them, but it will bring many great benefits. Tokenizing securities will allow costs to be reduced by automating back-office processes with simplified security management.
This will make processing and collecting paperwork less complex. The removal of banks from investment transactions will mean lower issuance fees. It involves the use of smart contracts, which will allow for real-time settlements between sellers and buyers. This, in turn, decreases risks. A smart contract will automate dividend payments, making the process a lot more convenient. By dividing dividends and initiating proxy voting, security tokens will allow a more accurate judgment of your asset or assets. This will be a more accurate asset valuation because of the free, competitive nature of the market.
Security Tokens Provide More Transparency
Blockchain will verify and track all data in order to protect the infrastructure. These processes and precautions will make it immune to tampering, making reporting and auditing a lot easier. This will help prevent mispricing, fraud, and any other corruption or manipulation.