With the advent of 2019, there is a lot of buzz of STO security token offering in the market of Initial Coin Offering. According to the research, the market of STO will surpass the staggering figure of $ 10 trillion by 2020. So definitely you are curious to know, what actually STO is, and why it is so popular. This article will help you to understand STO in a better manner.
diving into STO, first of all it is mandatory to understand security in finance.
Financial assets like bond, debenture, notes, opinions, shares (stock) and
warrants are known as security. Share or stock allows you to own a part in a
company without taking actual possession of it.
Government and company issue
stock IPO, bonds, and debenture to raise the funds from the capital market from
various investors. And investors get their money in the form of dividends or
interest rates or share of company’s profit.
And when these things are done through cryptographic token then it is
known as “Security Token.” So STO
security token offering can be defined as, cryptographic token that pays
dividend, share profit and interest to owner, and also allow them to reinvest
into other security tokens.
token offering is like ICO, but unlike ICO, STOs are powered by security and
backed by real time assets. In more
simple words, in STO all investors must pass KYC and AML checks and they have
to follow the regulatory standards of investors based on the rules of their
country. STOs are developed with advanced security, so it is considered more authentic
than ICO. For example, if any STO token is backed by Facebook, value of that
token will fluctuate according to the market value of Facebook.
security token provides certain right to token holder within the platform of
the token. With this token, token holder will have right to vote and choose
allows users to trade real assets within the confines of the platform. This can help to govern rewards when certain
tasks have been completed.
token allows you to participate in STO and you can trade within the system
function security token, owner can enhance the user-experience of people who
use that particular system.
According to the value of the token, users can use this token as currency for exchange inside as well as outside of the platform.
1. Blockchain protocol
tokens are based on the Blockchain protocol and Ethereum is the most popular in
the STO eco-system. However with the passage of time more protocol entering the
2. Smart Contract
Contract is the programming language by the Blockchain protocol and it is
supposed to have a utility and therefor a value that’s why it is known as
3. Issuance platform
platform create and distribute the utility token, responsible for having
compliant, regulated smart contracts for the token issuance.
It is the most important, facilitates trading
and provides the liquidity in the digital asset eco-system. Without them, there
is no worth of token except if someone else is ready to pay for them.
STOs are swiftly replacing ICOs. Year 2018 was quite good for STO and some major sectors like investment and trading, technology, financial services, real estate, Health care and Fintech are entering in the market of STO. With market share of 20% of total STOs investment and trading sector leading the market. With the advent of 2019, there are over 60% STOs are entering into the market. Besides, companies who are raising the funds for their projects realizing that investors and funds are more inclined toward security token instead of utility tokens, so arguably STO will rule in crypto market in 2019 and beyond.
thing about security token offering is that it is legal, regulated, and
backed by the real time assets. Besides, STO is checked meticulously before
launching which eliminates the chance of scam and fraud. Unlike ICO, the market
of STO will not affected by the price of Bitcoin, rather the operation of the
business and cash flow will decide the market value of any STO. Now STO is at
initial stage and with the passage of time more STO will enter into the crypto market
and in future it will rule over the ICOs.
Hi, I am Soumen, freelancer content writer and I love to write on crypto industry. I am passionate researcher love to explore new thing and love to simplify complicated things. When I do not write i watch soccer and play computer game.