Future of Security Tokens
In the recent years, Blockchain has been modernising the fund-raising and investment methods at a very rapid pace. This has largely become possible due to the mushroom growth of cryptocurrencies. With each passing day, a number of digital currencies are being introduced and each of the currency tends to possess a varying level of security for the investors and the management teams. This hints at the approaching prospects for the lack of security mechanism between the two parties. Under such pressing times, the use of the Security Tokens can become more relevant than it has ever been in the world of technology (Levin, 2018).
Security Tokens are a relatively more secure way of granting access to a network system. With the additional layer of security especially in the fast-changing world of digitalised investments, their relevance has increased greatly. The investors who are wary of putting their contributions online can feel safer if there is an intermediary and a two-step authorisation facility. When investing through cryptocurrencies Cryptographic cards are also used whose passcode are periodically changed and exchanged between the network and the cardholder. Previously, in ICOs there are reported incidents of withdrawals of amounts without providing prior notice to the other party or in some cases, the investment could not get materialised due to some factors at the management side. As a result, losses had become commonplace which undermined the scope of digitalised currency-based investments (Chen and Pan, 2018).
Benefits of Security Tokens
One of the most important benefits of the security token is the increasing layer of the security it provides. For example, even if the electronic device or the card that is used to grant access to the network is lost or stolen, the investment of a person cannot be misused as it allows to attach a bank card or any other sensitive information that the owner of the token can keep with himself. This could also be a passcode or a piece of information and on being accessed from an unauthorized person, it will ring the alarm bells that will, in turn, activate the security system to dissuade the theft attack. Thus, with a Security Token, the funds of the investors will always be free from being stolen (Jackson, 2018).
Challenges for Security Tokens
In the world of technology, it cannot be completely assured whether a device or a technological equipment will not malfunction and the Security Tokens are no exception in this regard. It is trite to say to that everything that is connected with the internet is prone to be hacked and when there is a huge investment at stake, the risks become even higher. Thus, there are chances that the Security Tokens despite having additional security layer may fall prey to such attack. Although the chances are slim as presently it is the most efficient security system that is prevalent especially for the cryptocurrencies but one cannot say in an outright manner whether it cannot come under a cyber attack (Mokhtarian and Lindgren, 2017).
Future Prospects
The road to the future is conducive for the growth of Security Tokens, as all those investors around the world who have been discouraged by frauds and cyber attacks will now find an upgraded security system for their funds in the form of Security Tokens. Moreover, fast maturing cryptocurrency market will also provide a required momentum to the Security Tokens as with increasing transactions the need for security will increase substantively (Levin, 2018).
References
Chen, J., & Pan, E. (2018). Tokenized Hardware: The New Crypto Innovation.
Jackson, O. (2018). US or Swiss approach for EU crypto regulation? International Financial Law Review.
Levin, B. (2018). Potential for Cryptocurrency to Fund Investment in Sustainable Real Assets.
Mokhtarian, E., & Lindgren, A. (2017). Rise of the Crypto Hedge Fund: Operational Issues and Best Practices for Institutional Cryptocurrency Trading.
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