Security tokens have become a crucial factor in the cryptosphere! Security tokens development touted as the next great phase in crypto industry, they have already grabbed serious attention over the crypto enthusiasts already! Though 2018 was the year of Initial Coin Offerings where new companies raised the money around $6.3billion, people can foresee the downfall of ICO now.
The Demise of ICO
However, the ICO started to fail by reaching a decline of around 29% by September 2018. Added, people have lost their interest over ICO which is yet another sign proving the tide is running.
After all these hypes and billions in fund losing, ICO has slowly started diminishing from the crypto industry.
ICO has failed due to these three primary reasons:
- CryptoEconomics : Crypto Developers usually forget the word “Crypto Economics” of their ICO’s. They give attention only to the cryptography part!
- Utility : A utility is nothing but the total satisfaction derived from the consumption of goods and services! Most of the ICO’s doesn’t know to maximize their utility token which is considered to be another reason for the downfall.
- Security: Security has become the primary concern of people nowadays. ICO has limited security features which can result in hacking the site by intruders.
The Rise of STO
With these possible failure factors, STO came into existence with its outstanding features which experts were longing for!
STOs help accomplish the needs and expectations of all stakeholders who will soon be able to experience exceptional accessibility, visibility, and accountability.
So now what are Security Tokens?
Initially, tokens are nothing but the object which can be created to provide the limited value for a particular ecosystem. When it comes to cryptocurrency network, tokens are created on the blockchain network which represents a particular value or an asset!
So Security Tokens are the crypto tokens which are qualified for the Howey test. Security token offering can be traded, exchanged, and circulated just like other cryptocurrencies. Similar to others, these tokens to run on Ethereum platform with defined standards.
How does ERC 1400 Security token standard differ from Utility Tokens?
Utility tokens represent access to the network while token purchase represents the ability to buy goods and services from the crypto network.
Yet another thing is that Security Token represents complete or fractional ownership where one can have a stake in a company, real estate, intellectual property represented by Security Token.
Security Tokens can be a digital form of all financial securities. ERC 1400 Ethereum which is the proposed standard for Security Coins incorporates diverse ownership, error signaling, document reference, access control, etc.
In the cryptosphere network, fiat analysts believe Security Tokens shouldn’t be legally considered as securities. The major reason behind this is Security Tokens are not often backed by real-world assets.
This is were ERC 1400 solution came into existence. ERC 1400 will be a combination of both ERC-20 and ERC-777 standards and will ensure that Security Tokens compatible with regulations.
Features of ERC 1400 you need to be aware of
ERC 1400 Partially Fungible Token Standard comes with feature-packed solutions enabling high-end outcomes:
- Comprised of a standard interface to query, validate, justify success and failure of transactions!
- A mandatory feature to attach metadata to a token holder’s balance.
- The possibility of modifying metadata and transaction parameters on and off-chain.
- Limitless range of asset classes across representable jurisdictions.
Making it simple
If you are still confused on the features of ERC 1400 security token protocol here we have explained it for non-technical users as well:
- ERC 1400 makes the security token transaction more transparent since it consists of a standard interface through which status of any transaction can be checked at the real time.
- Security token development enables non-fungibility of the tokens. This will enable account holders the right to accept or reject token transfers into the respective account.
Functions added in ERC 1400
This neoteric token has brought forth a complete set of functions such as:
- get Document/ set Document: Allows the users to manage the library of documents associated with the tokens.
- canSend: Possesses an on chain function to determine if the transfer will succeed, and return details which indicates the reason if the transfer fails/becomes invalid.
- Issuable: This token can specify if the token issuance has been completed.
- IssuebyTranche: This function is made to increase the total supply.
Benefits of ERC 1400
Besides from making STO’s more legitimate, the ERC 1400 will make tokens more dependable form of investment.
Importance of security token standard
- With standard, security token protocol can be adopted in a meaningful way since issuers, investors, stock exchanges, developers can work within the same framework.
- Similarly, token ERC 20 has caused expansion of the utility tokens, the ERC 1400 could surge the expansion of the security tokens thanks to its interoperability feature!
- By making use of the standard interface, security tokens can be operated and used at all relevant parties!
Now it has been the year of STO’s through which there can be seen huge advancements in STO development company across the globe! If you are looking for a platform with reliability, security and user-friendly features, ERC 1400 can be your primary choice!
At Icoclone, we offer STO development services enriching the client expectations and solutions as needed. If you are hunting for one, we can be the best without denial!