In technology we trust
Technology has some major changes in store for us that will reshape our society and the way we live, forever. The transformation has already started and these are the main technology-based structures that are creating a new face for our planet, making our lives easier:
Known as Bitcoin’s underlying technology or the distributed encrypted ledger, Blockchain is disrupting the status quo shaping the future of finances, banks, property, education, etc. right in front of our eyes. Blockchain technology will replace very soon the obsolete, dull and time-consuming back-office traditional processes that are non-efficient and costly. Major financial players like IBM, Microsoft, Alphabet (Google), and important banks as HSBC, JP Morgan Chase, Bank of America have explored the territory of Blockchain or even invested in, which makes us have no doubt about the credibility and safety of the distributed ledger. These companies and all the major financial institutions would never be interested in investments that would ruin their reputation or their returns.
The decentralised digital currency that uses cryptography to secure transactions, operating independently of a central bank, has transformed the face of the global financial system. This could be the money of the future, considering that banks, governments and many companies are aware of its importance. It’s completely decentralised, with no server or central authority. Its major advantage is that transactions are carried out in seconds, as well as with minimal costs compared to traditional banking, which takes days and costs about $35 per any international wire transfer.
The Initial Coin Offering (ICO)
ICO is an innovative crowdfunding model that has raised billions in 2017, with an unbelievable speed. And this is just the beginning. In the past six months, it has just overtaken the fund raise against traditional venture capital funding market. Analysts foresee this will eventually become a multi-trillion dollar industry, even though banks and governments are trying to impede the world revolution that has already started. How does ICO work? Everything is very simple: using Blockchain, startups can raise funds by issuing crypto tokens that can be distributed across the network to the buyers, giving access to a service and dividends to their holders.
Advantages of security-based tokens
There are 2 types of ICOs: Utility and Security ICOs. The difference between them is that a non-security or utility Blockchain Token is for commercial use rather than investment, and a security Blockchain Token is for any kind of investment contract and transaction. There is a whole debate about the advantages of security-based tokens and nobody can deny anymore the benefits they can offer to an investor. Tokens represent shares of a business, while a security refers to any kind of tradable asset.
ICOs opened a road full of opportunities, where investors have access to a wide variety of securities tokens, from coins reimbursable for precious metals and stones, to tokens backed by real estate assets. Security tokens can lower legal risk, as they provide legal certainty, they strengthen buyer protection, give better returns and are ideal for valuables, property, art and any major assets of high value as gold, diamonds, etc.
Issuing security tokens is faster and cheaper than an Initial Public Offering, and as we all agree, time and money are the most important resources we can use in our chase for success, professionally and personally. Through security tokens, all investors are protected against fraud, as a considerable number of sales are limited only to accredited investors, while the non-accredited ones have investment limits that don’t allow them to get involved in any transactional process. Token buyers can have benefits like dividends, profit shares, and voting rights, which give them power inside the organization. Securities can be sold only to accredited investors and they represent real shares of a company, just like stocks.
Businessmen will want to lose money only when Hell will freeze. Until then, they want protection against market manipulations and safe investments, if possible backed by tangible assets that will bring them high financial profits. Security tokens are a safe road that leads to low-risk investments, hence higher monetary returns. They are perfect for investors who want safety and put their money in assets like property, gold, diamonds, art, etc. Many businessmen put their eggs in more than one basket, to make sure that if one business goes wrong, there will be a safety net, and tradable assets seem to be a good choice. Technology opened a door to infinite possibilities of making business easier and safer, and time will prove the efficiency, profitability, and safety of security-based tokens.
Author: Mru Patel, Partner and COO of Flash Group, CEO of Sapian Capital