The cryptocurrency market has seen huge growth since the creation of Bitcoin in 2008. Over the course of the past 10 years we have seen huge bull markets, frightening bear markets, and many new developments in the technology.
Last year, we saw the insurgence of the ICO market. Organizations raising money for their Blockchain projects through a funding mechanism called an Initial Coin Offering. Selling tokens in exchange for money to develop the concept.
As many ICO’s have made little progress in their development, a new advancement has been made in the digital asset market. Security Tokens or STO’s are becoming a new way for investors to take part in the crypto market and businesses to raise money.
It is still the beginning stages of this new market. However, STO’s are quickly becoming an exciting frontier for crypto influencers. We have decided to start a new series focusing on Security Tokens.
TEAMZ Take 8 aims to learn how digital asset influencers feel about STO’s and learn the ins and outs of them. Below is our first interview with Peter McCormack, host of the ‘What Bitcoin Did’ podcast.
Name: Peter McCormack
Short Bio: Peter is the host of The What Bitcoin Did podcast, one of the leading podcasts covering Bitcoin and Cryptocurrencies.
- What advantages or disadvantages do STO’s have in comparison to ICO’s?
An STO is an evolution of the ICO, providing companies with a compliant way of raising capital and protecting token holders. A security token is more akin to share ownership, thus avoiding the complication of value with the largely unproven model of token economics.
- How do you think STO’s will impact the global financial market?
STO’s promise much: easier access to global capital, better terms and a lower cost of entry, it remains to be seen whether a more liquid market for ownership has a positive effect on company valuations. Liquidity is a problem for investors in new/smaller companies and a liquid market for STOs could lead to downward pressure on company valuations.
- Do STO’s pose a threat to Bitcoin becoming the Global Reserve Currency? Please Explain.
No. Bitcoin is a global settlement currency. STO’s are a vehicle for raising capital. The onramps for purchasing STO’s will likely bypass Bitcoin.
- How can regular investors position themselves best to take advantage of the growth of STO’s?
Right now, it is watch and see. STO’s are another use case for the mythical powers of the blockchain. The market is yet to prove whether this is a better model for raising capital and assigning ownership. The infrastructure is growing so anyone interested would be best to just watch the market to see how it evolves.
- What assets do you see being good opportunities for STO implementation?
Companies and real estate.
- Why do STO’s give more people opportunities to invest in digital assets?
Because STO’s are another use case for the expansion of digital assets. Investor accreditation rules will be tightly linked to STO’s so they will not be open to all investors, but generally speaking, they are a sign that we are moving further into a world of digital representations of asset ownership.
- What regulations do you feel are important to include or exclude for STO’s to grow to their potential?
I think it is time to rethink the arbitrary rules of investors accreditation. These rules are discriminatory and limit investment opportunities to a select few.
- What red flags should investors look for before investing in an STO?
Investors should look for the same red flags as when making any investment. The STO is just a way of issuing ownership, the fundamentals of the investment should be the same.
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Interviewer: Eric Sciberras – Director of TEAMZ Media – Follow on Twitter