What are Security Tokens?
Security tokens represent a real-world asset on a blockchain. They are digital forms of traditional securities, which can include stocks, bonds, and real estate properties. The key aspect of security tokens is that they are regulated and comply with the legal standards set by governing bodies, differentiating them from utility tokens.
Characteristics of Security Tokens
- Regulation: Security tokens adhere to financial regulations, providing legal protections for investors.
- Ownership Rights: They confer ownership rights and entitlements, similar to traditional securities.
- Dividends: Security tokens can provide dividends or profit-sharing to holders.
- Transferability: Leveraging blockchain technology, they enable seamless and instantaneous transferability on secondary markets.
Benefits of Security Tokens
Security tokens enhance liquidity in markets, allowing for fractional ownership of assets. They also reduce transaction costs and time by utilizing blockchain technology for efficient record-keeping and transfers. Furthermore, they offer transparency and security, as all transactions are recorded on an immutable ledger.
Use Cases
From real estate investments to startup funding, security tokens have a wide array of applications. They provide new fundraising opportunities for companies while giving investors a regulated way to invest in a growing digital asset landscape.