Security tokens market has great potential of the space to combine pragmatic perspectives from the technological and market dynamics. Most of the ideas are controversial about the security tokens which has made it a wider debate in this community.
There is a great gap between the reality of the current technology and the vision that is presented in conferences and tradeshows. Nevertheless, here are some security token idea that most people will disagree with.
Ethereum Might Not Be the Platform of Choice for Security Tokens in the Long Term
Most crypto-securities are built as variations, following the utility token frenzy. Ethereum is a great platform for utility tokens but it is irrelevant when it comes to the security token. Other cryptocurrencies such as Stellar, Algorand or EOS are a better fit for the dynamics of the security tokens. Take our word for it but if you do not agree to Ethereum being right for the security token, search more.
Smart Contracts Are a Horrible Way to Implement Security Tokens
Let me get this straight, security token cannot be modeled as smart contracts. Not everything in the world can be made into smart contracts easily. This is because the constructs used in security tokens dynamics have very little to do with smart contracts which makes the developers to find another way around it.
The more the sophisticated scenarios, the more it is impossible to for the smart contracts to be an option for the generation of the security token.
Without a Killer Product, Security Tokens Might Stay Irrelevant for Years
As you might have heard, security tokens might be the next big financial revolution or the biggest application for the Blockchain technology. However, this is not the case at all. They don’t have any economic or technological rigor behind it.
As promising the product can be, it might stay irrelevant for decades until an application was found. This is something we have definitely learned from looking at previous financial markets
The Killer Application for Security Tokens Will Not Happen Without the Right Infrastructure
Now nothing is possible without having the right infrastructure. The main focus should not on be the specific use cases but on the infrastructure. In order to create a viable security token applications, it is important to highlight debt protocols, custody, disclosures, analytics, and governance are all important building blocks to enable fintech startup. Fair enough to say, it’s important to give other important factors attention to improve.
Liquidity is something you Build, Not Something that Happens
Now the biggest challenge in the security token space is not any of the problem mention above, but liquidity is by far the most dreadful of them all. If we don’t establish or achieve a significant level of liquidity, everything will fall slowly into a slow and painful transition to irrelevance and we don’t want that!
History is full of financial markets experiences which make you learn how much important liquidity is. The key focus should also be put on building products for large institutional investors and building liquidity pool. This will ensure the long-term viability of the space.