Rise of the STO (Security Token Offering) & ABT (Asset-Backed Token): Triggers for the Next Crypto Bull Market?

Successful STO

ICO’s were certainly part of the 2017 crypto bull run, and now people are wondering if the better regulated STO’s will herald the next one.

There are many articles out there already that seem to be building excitement about them, but there are many Asset-Backed Token projects up and running already, which could be better buys as they begin to get going.

Examples of security tokens include those backed by fine art, precious metals, real estate… and will allow anyone to invest and own portions of things that are less volatile and already in existence. You can now invest in big tech companies like Amazon and receive dividends just like ordinary fiat investors. You can see why there’s a buzz. By creating an STO, companies can raise money from non-institutional investors wishing to purchase a proper stake in their promising project.

The line between a security token and utility token is not always clear, but generally there’s a lot more effort required to set one up. Some like DigixDAO Network is all about gold, and has two interacting tokens issued on Ethereum. But there is a new token for securities emerging, with platforms such as Polymath (Poly) better suited to the task of issuing them or trading them.

ink illo of person holding token balloon by greenwise art

Utility tokens

To be honest, you should be paying me with Ade’sPress tokens right now, for access to this free post you’re reading. Careful though, as you’ll be spending AP tokens that might’ve allowed you to buy my rare crypto-collectibles, listen to my old music or order stuff from the shop. These assets are already all in existence, (but are currently all on separate sites). Whether this blogsite will continue to grow is less certain, but you could hang on to your tokens if you like, just in case.

That’s just an example. Sadly, my ecosystem is pretty small, but it is partly asset-backed by this content, although the rest – the growth – is yet to come. (In the meantime, feel free to add this site to receive automatic BAT tips using the Brave browser – if you like – instead!).

The above idea belongs more to the realm of digital tokens and ecosystems. What if the blogsite hasn’t even been constructed yet? Token ecosystems form a good part of my current Coin View posts here at Ade’s Crypto Press. Finding out just what that token will do, or how a user can generate more by engaging with the site, is part of the fun, especially with large social media token sites like Steemit.

They’re actually the more interesting for me, as they form part of the excitement about future possibilities, decentralisation via crypto and ecosystem growth, and they also allow for the possibility of passive income or income from getting involved via staking, content creation, reviews or contributions.

Security tokens meanwhile look to hold more ‘present’ value by giving anybody digital tokens that represent a well-regulated stake in something valuable, and less speculative.

Asset-backed

ABT’s or security tokens are more compliant and therefore more tricky to set up. They have included gold-backed, diamond-backed, or real-estate backed tokens for some time. (See the resources section below.)

However, ABT’s are starting to include equities in existing companies, and can even now be traded with crypto on exchanges like DX Exchange. They will allow you to receive regular dividends just like normal shares. This could be exciting for traditional companies and investment as a whole. They’re about to see a slow and steady arrival of many new investors from all walks of life.

It’s possible they will build important bridges between the blockchain and traditional company world. However, wouldn’t you rather invest in an exciting new online, decentralised project? Many would now think twice due to the length of time (and market conditions) to get that token valuable. Many ICOs were paid for with Ethereum at a time when the price had exploded, so that when it came to distributing the tokens, investors received far less value than what they expected.

Let’s all remember that with ABTs instead of buying a token that you could use one day, or vote with, instead you’ll be buying an actual tokenised share (you can trade) in a company that gives you dividend rights over how that company is run. How about getting both, like DigixDAO? But many companies have no plans to become decentralised, or cut out middle-men. Obviously it will depend on the project.

Getting in early on an STO however, looks still to be a very attractive way to support diverse projects early and more comprehensively like a stock, and a new way to raise money and interest from a diverse spectrum.

It will be interesting to see how things develop, and hopefully ICOs will try and follow similar, more compliant paths paved by STOs.

It’s also worth finding (crypto) projects or networks that never even had to use an ICO to raise money, as they were so well supported and liked by their communities from the outset.

Resources…

Example page of successful STO project ‘The Art Token’ (TAT) at Swarm

STOScope – find interesting STOs.

List of Real-Estate Asset-Backed projects

Spice VC leaders in security tokens

 

March 2019. 

Note: This entry forms part of my personal adventures in crypto-space. Comments, ideas and corrections really appreciated to enhance my site and help me educate/be educated. I may even ask you for your (best) crypto address so I can send a tip in exchange for helpful correction/insight.

Advertisements

Your thoughts on this?

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.