Get ready for the Security Token takeover
Most people well versed in the crypto space are well aware of security tokens and the disruption it can bring.
This quick post will summarize what security tokens are for those who aren’t aware. Concluding with why it will change the capital markets unlike anything we’ve ever seen.
What are security tokens?
Security tokens are quite simply, digital shares of a tokenized asset.
“Wow, how disruptive!”
“How is this going to change the world?” you might ask, in which case I would tell you that these digital assets are based on blockchain technology.
I don’t have to trust a 3rd party to verify ownership.
Information regarding these digital shares are publicly available and transparent.
To manage and or transfer ownership is efficient and cheap.
What does that mean in the real world?
If your a business owner, you could tokenize your company’s equity shares and manage it’s cap table on the blockchain.
If your a home owner, you could tokenize your home and sell fractions of it’s value.
Services become distributed ledger based, creating increase transparency.
What this really means is increased liquidity, that’s the biggest value proposition. More liquidity decreases the required return profile and there are hundreds of trillions of dollars sitting on the sidelines waiting to be tapped into.
That’s no exaggeration check this out:
Cryptocurrencies are currently the only tokenized asset class: $250 billion
Compare that to the global capital markets: $73 trillion
Now compare that to the global real estate markets: $217 trillion
It’s simply digitization of securities, it’s more evolutionary not revolutionary. It’s only a matter of time before we enter the new era of a tokenized world!
Thanks for reading.
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In my next post I’ll cover security token offerings including:
- Regulatory compliance
- 3 types of token assets define by FINMA
- Ecosystem currently in development to make this a reality and more!