The universe of cryptoassets and tokenization is increasingly attractive to people and companies for the countless possibilities it brings to business. One of them, which we are going to talk about here, are security tokens .

Security tokens , as they are also called, are digital representations, created and managed on a blockchain , of tradable assets – stocks, debentures, gold, guarantees – and can be used for companies and governments to raise funds for projects.

In return, investors receive dividends or part of the profit from the project for which the tokens are intended.

This is a relatively new concept in the market, which is still getting used to the cryptocurrency payment revolutions or asset tokenization , but it is catching the attention of investors and businesses around the world.

And when it comes to cryptographic technology, speed and innovation go hand in hand.

The arrival of security tokens also solves an important issue for institutions, which is the regulation of crypto-assets as a form of investment, in a non-speculative way.

But do you know the details of this innovative tokenization modality ?

In this article, we are going to talk about security tokens and how they will revolutionize the investment and fundraising market!

WHAT ARE SECURITY TOKENS AND HOW DO SECURITY TOKENS WORK?

To better understand what this tokenization means for the investment universe, we must start with the concept of security .

Despite being common terms in the financial market, they are almost unknown to the general public – where is the potential investors that security tokens want and can attract.

In the traditional market, security assets are offered by financial institutions and represent an investment with a guarantee – shares, debentures, guarantees and gold are the most common examples – and without owning them.

When we own shares in a company , for example, we are entitled to a portion of the dividends, we gain from the possible appreciation of the shares in a future sale of them, but we do not actually own the company.

Security assets are used by companies with the aim of capitalizing their operations and supporting new projects, delivering profitability in return and there is a risk of losses for investors.

Security tokens are, in practice, the representation of all these dynamics, with their possible losses and gains, in encrypted security .

And this process of tokenizing security assets has several advantages for companies and investors.

SECURITY TOKENS OFFER AND ICO ARE THE SAME THING?

They are not and at the base of these two acronyms is a fundamental aspect of the cryptographic world and the main difference between them: regulation.

Ending regulation is one of the goals of the movement that started with bitcoin in 2009 and reached tokenization and NFT , among other innovations. However, in the investment world, this becomes a problem.

ICO (Initial Coin Offering) allows digital currencies to be offered for innovative use in payments or, more commonly, as a volatile and speculative investment product.

On the other hand, the STO (offer of security tokens) is carried out on the blockchain under different conditions, with a degree of regulation that must be in line with the legal requirements for trading these assets.

The technology used provides an agile, safe and simple environment, but to offer these assets, smart contracts must guarantee the conditions that the market considers ideal for companies and investors to trade security asset tokens safely.

Behind the security token offering must be a solid company and project.

WHAT ARE THE ADVANTAGES OF USING SECURITY TOKENS IN YOUR BUSINESS?

SECURITY AND TRANSPARENCY OF TRANSACTIONS

The ecosystem created with the arrival of cryptocurrencies has security in operations as one of its main characteristics.

Everything is generated and controlled on the blockchain and using high-level encryption , which makes the environment immune to cyber attacks.

From the point of view of transparency, the network individually controls all operations carried out, with unique and cryptographic public and private keys, from offers to delivery of quotas, including approval of negotiations.

Transactions are recorded in an electronic ledger and available for analysis, which does not take away their confidentiality and allows tracking of everything done.

With all these precautions – without human interference – it is impossible for a company not to deliver the traded tokens or for an investor not to pay for them.

HIGHER LIQUIDITY

Undoubtedly, this is the main advantage of tokenizing security assets .

The entire operation involving security tokens is supported by the efficiency and speed of processing within the blockchain and cryptography, which provides agility for each transaction that is not possible in the bureaucratized environment of the traditional market.

In addition, a detail that makes all the difference in everyday life: the network of blocks works uninterrupted, as it does not depend on human presence.

Your stock tokens can be sold over the course of a weekend!

REGULATION

It seems contradictory to talk about regulation when it comes to tokenization , after all, its absence is one of the pillars of the revolution that created cryptocurrencies, blockchain and everything that came in their wake.

However, it is mandatory that companies make offers of digital security assets based on the official regulation on these assets, as they are governed by it when acquired in the traditional market.

This aspect leads to mutual trust:

• Investors have more confidence in the projects offered;
• Regulation qualifies the universe of investors, preserving the health of the system;

The effects are highly positive:

• Increased visibility of offers;
• Greater appreciation of tokenization as an offering method;
• Increase in the base of potential investors .

Another important aspect is smart contracts – or smart contracts – which are the encrypted versions of traditional contracts. All conditions are electronically provided for and fulfilled.

VALUATION

This is an important advantage of security tokens over buying cryptocurrencies as a form of speculative investment .

The appreciation of security tokens follows market dynamics and is linked to factors such as company performance, market moods and the credibility of the token issuer .

There is an inherent speculative component to assets like stocks, but the factors we mentioned earlier create a balance of forces. On the other hand, direct investment in cryptocurrencies is based on speculation.

Tokenizing security assets is an excellent strategy to raise funds more quickly and with quality, as it brings together the benefits of blockchain technology with agility in operations, liquidity and a lot of security.

BLOCKBR Digital Assets is a fintech that combines technological innovation and digital knowledge to transform physical assets into digital ones, in the asset tokenization process.

The offer of tokenized physical and financial assets, both current and new, is democratic and decentralized, which makes investing safer, simpler and more efficient.

We enable, structure, issue and offer tokens on our platform and beyond. Be aware that tokens depend on feasibility and regulatory factors.

Do you want to tokenize your business or part of it? Do you have a business solution and does it make sense to issue your own token ?

Fill out our form and we will contact you.

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