With the decline of ICOs, there has been a shift to STOs also known as tokenized securities.
Well, yes these are better regulated than ICOs and have the backing of several underlying assets.
They offer a natural return to their holders along with a higher degree of stability and guarantee.
Know all about tokenized securities
To know about tokenized securities, you should first know about security.
Security is ownership of stocks in a company and it can be divided into three categories- Equity, Debt, and Investment Fund.
Benefits of tokenization
What benefits does tokenization offers to stockholders? How are tokenized securities better than traditional trading?
Security tokens lessen the asymmetrical nature of info which may be needed during ownership transfer of a security.
The blockchain functions as a common platform for everyone to see and share.
Tokenization brings out the transparency in security ownership and governance which is more liable than traditional security offered away from the blockchain.
Tokenized securities have enhanced automation. Several functions that were performed by middlemen are now fully automated through blockchain.
Several intermediate stages enhance operational costs and create complications.
Tokenized securities simplify it by using smart contracts and equal information sharing.
There aren’t any intermediaries involved in it.
Usually, intermediaries charge hefty fees for their services. But with the use of smart contracts provided by a blockchain, there is no need for a costly or inexpensive intermediary.
Hence, all unnecessary costs are cut down and a direct relation between investor and issuer is created.
A lot of monetary institutes use private databases by influencing different levels. Thus, the alteration of the existing data is possible.
But with blockchain, history cannot be removed and ownership can never be denied. At the time of auditing, an immutable system depicts that your data hasn’t been edited.
Tokenized securities offer space for good circulation of value. The idea to turn tangible assets to tokenization enhances liquidity in marketers.
Tokenized security trading platforms are reasonable because no intermediary charges are involved.
It also permits fractional ownership which means you can divide your asset into small units for trading.
All in all, tokenized securities are a great option to conduct trading in the fiscal market. You can trade in any kind of asset and generate revenue.
It offers great transparency and is fast, affordable, and immutable.