The initial coin offerings (ICO) have raised very rapidly over the past year. Some of them were labeled as utilities to avoid regulation, although in some cases there is utility. The first such token was Bitcoin, allowing users to access their network.
In the future, new tokens will appear, including new securities, which will remove intermediary exchanges using blockchain-based systems. Perhaps you will be able to tokenize stocks, bonds, and investment contracts into tokens, among other things, such as equity, dividends, voting rights, and more.
According to an article published by Crypto Dizrupt, the global financial system has improved since the introduction of new technologies. Using tokenized private securities, assets can be traded in secondary markets without traditional private securities. This means that it may be possible to see a future in which the security token market may exceed the US public equity space.
Security tokens can be divided into millions of bitcoin-like parts that can be divided into satoshi. This means that traditional assets will no longer have minimum investment requirements. Why not create a world in which users can pay for things using part of their stock?
The introduction of the blockchain technology would allow investors from around the world to have a portfolio of several companies only because these shares would be tokenized on the blockchain. Some of the global companies may simply account for a few cents in their portfolio.
Banks and other brokerage firms may be excluded from the process. By implementing peer-to-peer networks, you can eliminate intermediaries in the process of buying shares. There are several decentralized exchanges that become scalable and more user-friendly than ever before. This reduces entry barriers for new investors and allows new members to join the financial system.
Tokenization of assets also allows you to increase liquidity in the market. Some securities may be sold at a higher or lower price depending on the available liquidity in the market. When security is labeled, it is easier to trade in secondary markets. Since there are no middlemen in this process, the exchanges will try to improve their services by marking their services and remain competitive. This will have a positive effect on liquidity.
One of the most popular blockchain networks operating in this space is Ethereum (ETH), which has been able to offer various solutions for tokenized securities. According to CryptoDizrupt, demand for Ether may increase as it will be used to power these assets and conduct their operations.
There are various exchanges and platforms that are working on this issue to meet market demand. In the future, we will see how new platforms will launch similar systems and offer more opportunities for investors.