Introduction to Security Tokens (STO) and Non Fungible Tokens (NFT)

Security tokens are the next generation channels of capital formation for businesses. These offerings are similar to traditional securities offerings, but instead of receiving a stock certificate or note for their investments, investors receive their investment shares in the form of security tokens.

• STOs are NOT cryptocurrencies.
• Regulated by governing bodies and must be issued and traded on licensed platforms, such as InvestaX
• Essentially digitized version of traditional as well as alternative investments.
• Presents security-like features such as receiving voting rights and dividends.

Non Fungible Tokens (NFT)

A non-fungible token (NFT) is a unit of data stored on the blockchain that certifies a digital asset to be unique and as such, not interchangeable. Photos, videos, audio and other types of digital files have been used to create NFTs

While access to the original file might not be restricted to the owner of the NFT, they are tracked on the blockchain to provide the owner with proof of ownership that is separate from copyright.

We are now living in a digital age where digital assets from all categories are growing at an exponential pace. Cryptocurrencies have opened our eyes up to the possibilities that blockchain technology can bring, allowing assets to be tokenized, changing the landscape of capital markets and bringing more efficiencies to the world we live in. It is certain that digital assets are here to stay and are the only way forward.

The year 2020–21 has been the year of blockchain. It saw the rise of NFTs, cryptocurrencies came into the mainstream like never before, decentralized Finance became a thing, and securities tokens became a phenomenon. Security tokens have gathered enough hype around them, and it is believed that STOs will be the next growth market in blockchain technology.

Due to the similarities in their characteristics, STOs are constantly being compared to NFTs, and the comparison is justified. STOs and NFTs are both vehicles that provide proof of ownership of an asset presented in different ways. NFTs use blockchain to prove the ownership of the asset, while in hindsight, STOs do the same; they don’t have all the sass attached but can easily replicate ownership over a real asset.

There have been multiple debates about NFTs over the last few months about the legality of some, but not all, NFTs. This has been particularly around the fractionalization of NFTs as these change the purpose and the characteristics of the NFT completely. This has yet to be determined and many regulated bodies have been examining these newfound structures and attempting to form a framework around them.

https://twitter.com/IxSwap/status/1465339906436259844?s=19

There are no right and wrongs to which structure is better; both STO and NFT structures are excellent in their own rights and are highly innovative solutions to represent ownership over an asset.

About IX Swap

IX Swap is a next-generation platform that leverages DeFi services backed by CeFi regulatory compliance to facilitate safe and convenient issuance, listing, and trading of security tokens and fractionalized NFTs.

By bridging the gap between traditional finance and innovative blockchain-based solutions, IX Swap is paving the way in democratizing access to traditional financial markets that have never been done before.

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