5 Reasons Why Security Tokens are the Next Big Wave
FTX, LUNA, and other projects have caused havoc within the crypto space, which has forced investors to ask themselves, ‘What am I actually investing in?’. Most cryptocurrencies and digital assets have little to no utility, presenting a fundamental issue of value.
Blockchain projects focused on real world application and functionality see calamities like FTX ‘a good thing’ because investors begin to shift focus toward value instead of hype.
At The Equity Report, we believe the next big wave within the blockchain space is with security tokens.
Security tokens are private and public assets owned digitally by individuals in the form of real estate, shares, automobiles, commodities, etc. Security token also confers value on purchases as they ensure the security of these assets on the blockchain ledger.
Security tokens were created to revolutionize the financial market into more attractive, free of centralized jurisdiction, and accommodate the operation format of blockchain technology.
Here are 5 Reasons Why Security Tokens are the Next Big Wave within the Digital Asset Space:
Legislation: With the recent FTX, LUNA, and other fantastic crypto meltdowns, global regulators are gearing up for a new round of rules and laws pertaining to digital assets. Some may see this as a bad thing, but for those interested in long term adoption of blockchain technology, new legislation becomes a serious positive. Financial regulators are being forced to develop the framework for all Americans to own their own token and own company shares on the blockchain.
Tokenization of Assets: The fractionalization of startup companies, real estate, or any other income-producing asset can be represented in the form of a divided-yielding security token, tradable on various security token exchanges. Unlike crypto, these tokens are regulated by the SEC and FINRA.
Dividend Distribution: Having assets or company shares on the blockchain provides maximum efficiency in relation to dividend distribution. Since the blockchain is immutable and cannot be altered, the dividend amount per share can be sent with a simple script. This method also allows for various distribution currency types where investors can be paid out in USD, ETH, DAI or any other digital asset.
Crowdfunding: Raising capital from the crowd without tokenization will soon become a thing of the past. It simply does not make sense not to take the simple additional step of fractionalization on the blockchain because it provides a level of transparency and liquidity that the traditional model does not offer. Investor wants and desires dictate any market, which is why they will request to only invest in tokenized companies.
Community development: The Sharing Equity Economy has opened peoples minds all over the world, where communities and affinity groups are starting to understand the value in communal investing. Airbnb, Turo, Uber, and other tech companies have disrupted old world industries by replacing bureaucracy with community. The next iteration of The Sharing Equity Economy is with the disruption of Banks. Security tokens, crowdfunding, and smart contracts are going to help community organizers replace the bank with community.