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Security Tokens Come To Retail Investors: Current Adoption Gap & Future Potential

The Security Tokens market is currently dominated by institutional investors. Even angel investors are also investing in potential STO projects that have some real-world application. Unlike stocks, not all individuals have access to invest directly in STOs.

Although there are STO specific platforms and exchanges available such as Polymath, Securitize and Swarm, typical investors are still unaware of these platforms because they are not very popular yet. However, most of the people who are active in crypto trading have some knowledge regarding STO investments.

STOs Investment Accessibility

All Security Token Offerings are not publicly traded, many of these projects are currently limited to big investors and funds. However, some platforms have already jumped into this market to

make STOs accessible to all retail investors. Some of these major platforms include:

All platforms use their own advanced blockchain technology to make investments secure and easily accessible. Some of these platforms such as PolyMath have listed hundreds of tokens and some of them carry excellent growth potential.

STOs Adoption Gap

Why don’t retail investors sign up and invest in Security Tokens, even though platforms are accessible to them? Actually, there are multiple reasons why these platforms are not yet adopted by the masses and why STO tokens are lacking behind despite their amazing blockchain-based application.

Lack of Awareness

It is uncommon for retail investors to stay up to date with technology trends. In 2020, 55% of adults in the US invested in the stock market including index funds, mutual funds  to diversify their holdings for maximum returns. If we look at new investors and traders in crypto, most of them are investing in top projects without entirely understanding their respective fundamentals.

There is not a mature market for STOs, nor does it have a significant trend on big platforms as of 2021. Hence, this transparent way of fundraising and investments is currently hidden from most investors despite all the platform options available.

Limited Projects

If we assume that some percentage of retail investors know about the STOs token and platforms to trade them, still most of these people are out of this game. There are just a couple of hundred projects to choose from and the STOs are not actively traded like other Cryptos and Stocks where prices change every second.

Out of these hundreds of projects, only a few get successful. Furthermore, due to limited option, most retail investors are unable to make their investment decision. They might end up overlooking STOs for the time being.

Comparison with ICOs Adoption

When ICOs were launched in 2013, retail investors were totally unaware of the concept until 2016 and 2017. In these two years, a large number of retail investors heavily invested in the ICOs market to gain maximum returns but unfortunately, many of them lost their money and savings due to scam projects.

This is also true with STOs, but they come with far better, transparent, and undeceivable blockchain technology. It may take a few more years for investors to come across STOs market and invest heavily. It is certain that the STOs moon phase is still yet to come but it needs some time until the market is mature enough. 

Future Adoption Potential

Retail investors are unlikely to invest in such a young market that had a total market cap of at $449 million in 2020. The same happened with ICOs back in 2016 and 2017. In the past 2 years, STO projects have doubled or even tripled in numbers. STOs will probably go mainstream when money influxes come to the market.

Crypto investors are going to be the first ones to adopt STOs and retail Stock traders will follow the trend. Crypto traders are more aware of blockchain technology that is backing up Security Tokens. Hence, they are more likely to invest in such projects.

On the other hand, traditional retail investors may see it as some speculative investment without any guaranteed returns. However, these dimensions will shift with proper education regarding such types of investments that carry a lot of potential for companies and investors.