What Are Security Tokens? Note Down Some Key Facts About It


When investors from all across the world noticed the booming wave of cryptocurrencies since 2017, it dragged the interest of the community of traders and developers to bring innovation to the industry. Where funding of new ventures was started by the investors, many new projects were being launched by developers. For the crowdfunding process, many new mechanisms and ideas came up. These included IEO, ICO, and STO. Among them, Initial Coin Offering also known as ICO has been much widely preferred by issuers for their new ventures. However, today, my main focus would be on important facts about security tokens. 

What Are Security Tokens?

If you are not familiar with what are security tokens, then let me introduce you that these are the securities or tradable financial entities like stocks, and bonds. These securities ensure monetary value in the form of profit-sharing or dividends and others. In short, security tokens are ownership of such security linked to the cryptographic tokens.

As I have mentioned above, due to massive fame, ICO has been a popularly referred by the token issuers for the launch of their new ventures. Many investors and entrepreneurs are much convinced about this crowdfunding tool that enables selling the use of the platform. But now, a new crowdfunding mechanism has gained attention other than its elder sibling. It is Security Token Offering, also called as STO. 

A Brief Knowledge About Security Token Offering

Before flocking on to some important key facts about security tokens, I would like to give you a brief understanding of the Security Token Offering or STO. Well, this is the process when security tokens are sold to investors who are interested in participation. Now, again the question comes back about security tokens. So these are investment contracts indicating legal ownership or digital assets like bonds, ETFs, and stocks. In that way, Security Token Offering is a process of tokenizing tradable assets and responsibly giving to the public. 

If you see from the token issuer or fundraiser perspective, you will know that STO can be transferred across borders in a simpler way. Besides this, it can also lead to the expansion of a wider audience and investors range. The major benefit which investors find in an STO is its ability to intercept the scams or a fake firm. Apart from being in line with regulations, trading of STOs is also done on verified exchanges. That is why it becomes possible for the traders to rely on them with their funds. After having a brief knowledge about Security Token Offering, now let me give you some key facts about security tokens.

Important Key Facts About Security Tokens

Below are some of the important key points about security tokens which you must know. These are:

Replacement Of Regular IPO By Issued Security Token backed By Share

The price of old Initial public offerings can go up to around $1 million, and also it takes so much time. In that way, when security tokens backed by share are released, then it benefits companies in raising the funds for some cost. And also, besides it, will lead to the completion of the timeline very early.

Bifurcation Of Investments By Security Tokens For Regular Investors

Investing a minimal amount on big mediums like Google and Facebook during the early stage of Initial public offering might not be that simple. Security tokens that are completely divided are surely the solution for p2p trading. Also, it will reduce the hurdles in the entry point.

Big Projects Getting Public Attention

Just imagine a situation where a very reputed company is aiming to please its shareholders in maximum number rather than a regular minimum number of directors on board. Information will be required to reach the public, and the decision will remain stick to the ones who are behind leading to voting by those holding shares or tokens.

Ranging Of Interests Of Investors Or Those Holding Token Or Issuing It

It is not necessary to expect the benefits of token value by the decision taken by issuers of a utility token. Having no investment is its quality. Business counts more to them. In that way, there is not much value left for utility token. The binding of the value of security tokens, in comparison to the importance of an asset that is restricted to the company’s direct success nothing, is bothering for buying tokens regarding interests of the parties that differ so much.


So these are all the key points which I have referred to about security tokens. In this blog, I have also mentioned about what are security tokens and about security token offering. However, if you are interested in knowing about ongoing security token offering listing, then I suggest you visit the Cryptoknowmics website. It is the leading website for cryptocurrency topics like Initial Coin Offerings, Bitcoin, altcoins, cryptocurrency exchanges, digital wallets, and more about security token offering. It is the best crypto guide for all crypto enthusiasts, who are interested in knowing everything related to the crypto world. So go and explore it.

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