The number of people who invest through the Initial Coin Offering (ICO) drops by 90%. The reasons are fraudsters, exit fraud, lack of regulations and pressure from several government agencies like the SEC. However, some strong alternatives such as Security Token Offering (STO) have strengthened investor confidence.
Security token offers are a modern method of trustworthy fundraising that would replace the traditional IPO method. It is believed that crypto coins and tokens will gain the confidence of the investment market and will change seriously with the development of STO. As government agencies support STOs, this becomes a reliable investment option as an ICO.
STOs offer everyone the opportunity to invest in a company in a more accessible, affordable and secure way. If you are the entrepreneur or startup that wanted to offer a security token? Get advice from Blockchain App Factory, an experienced expert STO development Company that also offers various other blockchain-enabled services.
Let's look at the top five benefits of offering security tokens:
Security tokens are often confused with utility tokens. In contrast to utility tokens that offer exclusive access to services or products in the blockchain network and have no other value in themselves. While security tokens are financial instruments that have designed token assets, this grants ownership of:
I) Company property or share
ii) Dividend payments
iii) Loan commitments
iv) Company property or share
STOs are mostly misinterpreted as "updated versions of ICO", which is completely wrong. Collecting donations through ICO using cryptocurrency is like raising capital in return for pre-sold rights to access the service when the product is ready.
The main problem with initial coin offering is that the whole atmosphere offers no regulation and no protection for investors and the investments made.
However, this is not the case with STOs. Some guidelines fully regulate this. These are tokenized securities and some traditional laws that apply to them. This means that all companies applying for STOs should comply with government rules and regulations.
24/7 MARKET ACCESS:
All traditional stock exchanges and stock markets are bound by strictly predefined working hours. Even if an important matter happens when the market is closed, no one can get a return from it.
However, security tokens are available around the clock. This means you can trade assets around the clock and access new updates or events in good time.
Blockchain technology offers a decentralized and uniform method for data tracking and manipulation due to its immutable general ledger. This infrastructure helps to keep the ownership of securities completely transparent and secure.
Blockchain technology helps to subdivide the traditional illiquid assets into asset tokens and these tokenized assets such as art, real estate or old monuments. Tokenization provides average investors with access to real estate on large projects that traditionally belonged to people with large capital.
Security token offering is becoming increasingly popular among young startups and is becoming an interesting alternative to traditional IPOs and crowdfunding. STO provides a faster, cheaper, and more flexible way to raise the funds required for project development.
If you are the entrepreneur or startup that wanted to offer a security token? Contact Blockchain App Factory now for a fast and reliable service.
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