Is it worth investing in security-tokens?

David Kemp

Security-tokens are a convenient and effective tool for investing in cryptocurrency projects. However, not everyone understands a clear difference between them and the usual ICO. Read more about this tool and explore its features with the Libra coin as an example.

Further cryptocurrencies progress has resulted in development of new tools of investment. Some of them are have great success, bringing huge benefits to its participants, such as high profits from their investments. According to experts, security tokens successfully eliminate the shortcomings of classic ICO, which allows us to talk about their huge potential.

ICO issues solved by security-tokens

FINMA distinguishes three types of tokens:

  • Payment Tokens. Designed to pay for products or services of the issuing company.
  • Utility Tokens. They are used to get access to some options, use services, etc.
  • Security Tokens. Represent licensed securities, work as shares. 

When participating in the ICO, the users have a different status rather than classic investors. They do not get any special rights. Participation in some security-tokenization projects provides the right to vote, the pre-emptive right to purchase additional issued assets, to have control over the company's actions and to receive a share of profits. Another disadvantage of ICO is that many projects are frankly fraudulent.

Features of investing in security assets, with Libra taken as example

Facebook Libra cryptocurrency opens up opportunities for investment. There are two key opportunities for those wishing to participate in the project. They can purchase the Libra coin and the Libra Investment Token. The first option is fully available to all interested parties. Everyone can participate even with the smallest investment. You may read more about the features of this cryptocurrency in "What is Libra?" article.

Security

Libra Investment Token tokens are available to those, investing at least 10 million dollars. Such assets help you kill two birds with one stone: get profits once the price sees an increase, as well as benefit from having a share of the company's profits. Thus, Facebook intends to spend part of the raised funds to purchase low-risk securitiesAs a result, the token owners may get profits, whereas the owners of regular coins may simple ignore that.

Payments of the first dividends will lead to an increase in interest in tokens and inform about the success of the project. Therefore, the purchase of security-tokens looks more promising in comparison with conventional coins.

What is the future of security assets?

Some startups seek to ensure that their tokens are not considered as securities. And all trends are developing in the direction of security tokens.The arrival of institutional investors obviously brings about great changes to the development. At the same time, security-tokens are strikingly different from cryptocurrencies, so a significant layer of the community strongly rejects the new rules of the game and develops solutions based on Proof-of-Work.

The transition to security-tokens is not an easy process. The development of this area will require building the appropriate infrastructure and waiting for the development of clear rules of financial regulators.

 And even at its early stages, security tokens offer a wide variety of advantages that distinguish this tool among others. While being secure, it opens up various opportunities for the owner. Though, keep in mind the crypto market suffers from huge amount of greenhorns and scammers. Our portal may help you find recommendations to determine a project worth your investments and gain positive experience as a result.