SECURITY TOKEN (2)

  • July 26, 2021

THE REVOLUTION IN INVESTMENT (Part2:Applications and solutions)

Financial innovation is not always out of these two cases; Find a new way to create new securities or find A new way to get the most optimized solution… Creating securities means being able to document an object in the real world connect that can be traded separately from the physical object. (Ben Hant, phenomenon of Epsilon, 2018)

Today, the cryptocurrency ecosystem faces various problems. These problems, which are in the areas of scalability, legislation, speed, etc., have become a stimulus for Cryptos to expand every day to solve them. Security tokens, as one of these developments, make benefits for both traditional and crypto markets by tokenizing various assets by adding blockchain and cryptocurrency capabilities to traditional markets to solve some of the mentioned problems. we will talk about some of these problems and solutions in this article.

Security Tokens provide liquidity to assets by connecting assets to decentralized without time and space constraints markets. These tokens, with a price equivalent to their backing, make it possible for us to exchange a particular asset like other cryptocurrencies on a 24-hour basis, also, they increase liquidity by making it possible to exchange asset’s tokens to other properties.

for example, you can buy a diamond in the USA when you are in china, and just in a few seconds change it to gold or Microsoft shares, all with their equivalent tokens.

In financial markets, the process of cash inflows and outflows is time-consuming. Also, transferring money from one bank to another is very time-consuming and impossible from one market to another, whereas, when you use crypto assets, you can transfer and exchange your money as fastest and easiest as possible.

In the financial markets, there is no transparency in the reports, which means that the information of companies, etc is provided in a self-declared manner under the supervision of a usually governmental institution, and there is no specific information about transactions data and individuals, also, all traders Must have verified personal details but the use of cryptocurrencies is completely transparent because it is decentralized without the need for the supervision of an external body, all information is transparent and accessible, and even in many cryptocurrencies, token holders have the right to vote on current and future events of the company and blockchain rules.

– Securities tokens ecosystem

Exchanges: 

Platforms in this category create secondary markets for security tokens.

These exchanges, in addition to being a platform for buying and selling tokens, have functions such as Brokerage, stock inventory management systems, liquidation, and settlement. 

Exchanges can be centralized like TZero and OpenFinance or distributed like Airswap.

Brokers:

These platforms are usually formed to provide brokerage services to large investors.

Token Issuance:

Token issuance platforms typically provide protocols to companies that want to offer valuable tokens. These protocols include mechanisms for enforcing money laundering and customer authentication rules, checking investor credit, setting retention periods, setting investor restrictions, and meeting security requirements. The purpose of these platforms is to ensure compliance with the rules and regulations of securities for security tokens.

Old stock markets:

Some old stock exchanges have tried to move towards security tokens trading. These exchanges may not have legal freedom as exchanges such as OpenFinanceNetwork or TZero, but their great advantage is the trust of users and the awareness of the volume of transactions.

Side projects:

These Projects provide services that help keep the market going. These services include

Ensuring security and transfer of assets, legal protection, anti-money laundering, and authentication, etc.

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