Investment Banks' Gain - Why Trusted Middlemen Are Essential For Security Tokens!
March 11, 2019
Security tokens took shape when Initial Coin Offerings (ICOs) were advanced in a futuristic way when retail investors hoped to score a crypto fortune. The way crypto market is ruling the charts, one thing has been made clear - When it comes to money, crypto investors have the upper hand hence the more, the merrier.
Security tokens are a lot like ICOs however what they stand for is completely something else. Basically, the people partaking in crypto trading decide who the owner on an immutable shared blockchain ledger is. In short, security tokens pose larger capabilities than ICOs ever did; they are more regulated and cryptocurrency exchanges are faster.
The entire supply of security tokens ride largely on the institutional investors and their existence to keep the supply going. This determines one thing, at the soul of institutional investment ecosystem all investment banks lie. With security tokens, security has become more digitalized and is now more reliable when compared to ICOs. The primary motive is not to fund these security tokens, it has even modernized the way ownership of crypto assets is regulated over the network.
Investment Banks' Gains: A Breakdown
Usually, three trust layers come under a supreme security market that involves information of tokens, verification of assets and distribution of crypto's security tokens.
Trust Layer 1: Information of Security Tokens
The thing with security tokens is that investors should understand the assets they are looking to buy. The best part is that institutional investors are devoid of risks and deep down are well aware of the fact that they are always safeguarded.
The security that comes with security tokens is so high that only a true crypto master will be able to comprehend what he is buying. Although this is something that needs to be explored more, the market of security tokens is still in its infancies so the people dealing in this particular crypto affair are free to buy assets from the merchants having the capability to view any document involved. It's only time till the secondary model kicks in.
The power that lies with investment banks to determine the information to be showcased for the institutional investors.
Trust Layer 2: Verification of Assets
When the information has been amalgamated, it needs to be verified before being attached to the Blockchain processes. The same way all processes that go around in the world of security "process".
The tokens are verified justifiably, a similar process that is followed by investment bankers for a while now. This is why they were made - to basically revolutionize ICOs.
However this verification processing and all money trading work should be managed by the investment bankers where institutional investors should know how to go about their business effectively.
Trust Layer 3: Distribution of Crypto's Security Tokens
After the verification of information is done correctly by investment bankers who are given the entire power to all associated clients and this would involve all institutional investors.
Give this model some time and see how beautifully security tokens bloom!