Cryptocurrencies have changed the face of the economy and the technology world. When it was introduced by Satoshi Nakamoto in 2009, Bitcoin was meant to be a peer-to-peer network that would allow for individuals to make transactions and payments between two parties. Digital currencies have evolved ever since and thousands of coins and tokens are now in circulation on different blockchains. All these have different purposes and applications. There are also different types of tokens and new ones being created as we speak. In this article, we will analyze how certain types of digital assets have slowly been becoming prominent in the crypto space and how we are moving into a new era of security tokens.
In today’s crypto space, there are two main types of tokens, utility tokens, and security tokens. Utility tokens are digital assets that allow customers to use a service offered by a startup or established company. They are often used for Initial Coin Offerings (ICOs) to raise capital and then later become an integrant part of the startup’s product. Most of these tokens rely on the Ethereum blockchain and the ERC20 token standard. We can take the example of a crypto casino, where users are required to own the casino’s proprietary token in order to play. Security tokens, on the other hand, represent shares or equity in the company. Their value can be directly influenced by the company’s activities, revenue, and profit. They have no «real» purpose or use, but simply represents ownership in the company. They are similar to shares in the finance and business world. However, thanks to cryptocurrencies and the blockchain, they allow companies to cut the middleman between them and their customers. There is no longer a need for the company to go through a financial organization or bank to issue shares or complete transactions: it can all be done from company to customer with security tokens. These tokens are very promising and are becoming extremely important in the space. They are also changing and evolving at a rapid pace: we are about to experience the next era of security tokens.
We are currently witnessing a shift in the space and a very interesting change in how capital is raised and what tokens actually represent. Security tokens are gradually changing and are representing more than «just» equity in a company. We are reaching a point where real-world assets and cryptocurrencies are merging together as one. These tokens are no longer solely based on the company’s performance, revenue or profit. Instead, some startups, funds and investment and holding companies are launching their own cryptocurrencies that are backed by real-world, valuable resources. Thus, new tokens emerge that are oil-backed, gold-backed, gas-backed. The time where critics would say that cryptocurrencies have no real value is over. There are even cannabis coins seeing the light of day, as its value has increased in the United States where it is becoming legal in certain states.
I personally think that we are entering a new era for security tokens and that it is only the beginning of the crypto revolution as a whole. More and more startups and large corporations will follow the trend and start using security tokens for their business activities and to raise funding. I truly believe that we will see the emergence of Security Token Offerings and Equity Token Offerings in the next few months. Furthermore, there will be more security tokens mirroring physical resources like energy, electricity, gas, gold, oil, and more. This will also push the crypto space forward and reinforce its position of strength in today’s economy. Even though the digital currency markets have been experiencing a bear trend, the blockchain technology remains extremely promising and valuable and its applications continue to be almost endless. I consider that we are moving to a «tokenized» economy where more and more assets become decentralized and represented by a coin or token. We are entering the new era of security tokens.