As of now, many crypto enthusiasts are emerging towards Stablecoin and Security token. In the crypto industry, startups and entrepreneurs have more interest in buying Stablecoin and Security token.
Only some of the Security token development companies provide you Stablecoin and Security token. Because they are built by blockchain technology.
Now, the question is whether the Stablecoin and Security token are the same?. If not, how are they both different from one another?
In this blog, I have clearly explained how Stablecoin is related to Security token.
What is Stablecoin?
A Stablecoin is a cryptocurrency that pegged into any digital assets. Stability is made by pegging the worth of stablecoin to other ‘stable’ assets like fiat currencies, silver, or gold. Most of the stablecoin is linked to a decentralized organization. That organization should be managing the price of assets.
(Image source: coindoo)
Stablecoin is designed for stabilizing the value of the token and reducing its volatility. If you link the Stablecoin with USDT, then the value of the Stablecoin remains the same until the value of the asset changes in the market.
It is also pegged into gold. Most of the Stablecoin users invested in gold. When the price of gold rises then the value of a Stablecoin also rises. While developing a Stablecoin you should decide which asset can back with a Stablecoin.
Some users feel difficult when they lose their cryptocurrency value on the other day. Because on everyday value or price of crypto may differ in the crypto market. So users started to use Stablecoin. So that the value of the coin remains constant based on pegged assets.
What are the Types of Stablecoin?
There are four types of Stablecoin, they are
- Fiat collateralized
- Commodity collateralized
- Crypto collateralized
- Non-collateralized
Highlights of Stablecoin:
Some of the highlights using the Stablecoin are
- No volatility
- Liquidity
- Increased revelation
- 100% backed
- Financial enclosure
- Blockchain technology
- Flexible Stablecoin
What is the security token?
The security token is far different from utility tokens. To create a Security token you should submit your identity, documents, bonds, and other financial assets. But for utility tokens, there is no need for any financial assets. A Security token should satisfy all federal security regulations.
If a token does not satisfy any federal security regulations then the token can not be a Security token. A security token is built to bring trust to investors. So the individual can not cheat the investors. So it’s a major advantage for investors. The security token is not always secure. It may get stolen, lost, and hacked.
(Image source: the currency analytics)
Security token store personal information or identity electrically. It is also used as an additional password to prove the owner’s identity. The only Security token services can issue a high compact Security token. These tokens are derived only from blockchain technology.
The Security token development will be present in both the Security token exchange and the Security token offering website. One can build their Security token offering website quickly by the STO software
Stablecoin vs Security token:
There are some differences between Stablecoin and Security token. For your clear understanding here I have a table difference between a Stablecoin and Security token.
|
Stablecoin |
Security token |
| Stablecoin is cryptocurrencies that pegged into digital assets. | The security token is a token which should satisfy the federal security regulations |
| Stability made by pegging stable assets like fiat currencies, gold, or silver | backed with identity, documents, bonds, and other financial assets. |
| Stablecoin Derived from decentralized blockchain technology | Security token Derived from decentralized blockchain technology |
| The value of the coin remains constant according to pegged assets. | The value of a Security token may change daily according to the crypto market |
| The major drawback is low profit | Tokens may get stolen, lost, and hacked. It is the major drawback |
| Some of the Stablecoin is tether(USDT), USD coin(USDC), true USD(TUSD), DAI, Paxos Standard(PAX). | Some of the Security tokens are ENC, GOL, PCT, STX, CHAINEUM. |
How Stablecoin relates to Security token?
Stablecoin and Security token related in three ways they are
Fiat collateralized:
The most simple scheme in the Stablecoin is fiat collateralized Stablecoin. It is a token with a 1:1 ratio of cryptocurrency backed with fiat currency or gold. Created when fiat is held by the centralized issuer and destroyed after receiving the fiat asset. This structure can be easily understood.
The Non-currency extension can be classified as a security token. Eidoo is a Switzerland based company that has added an ERC-20 token. The token named Ekon. it is redeemable for one gram of 99.9% fine gold audited within every 90 days.
Ekon derives its value from the value of gold and is considered as a Security token. This approach describes EKON as a Security token.
Non-collateralized:
It differs from fiat collateralized. In fiat collateralized, Stablecoin is backed with gold or fiat currency. But in Non-collateralized Stablecoin is not backed with any assets or cryptocurrency. Instead of that, it maintains value by its user’s expectation of maintaining certain values.
The current approach of non-collateralized Stablecoin is seigniorage shares. This share includes the process of issuing bonds and shares, the way they are priced, payments stream, and evaluation. This mechanism is similar to security features.
In this way, Non-collateralized Stablecoin is related to the Security token.
Crypto collateralized:
Here the stablecoin is backed by the crypto assets. True USD, USD tether, and dia are the Stablecoin backed with the ethereum based smart contract. Crypto collateralized backed with crypto assets so the value may be change daily.
collateral is done via a crypto asset, the value of a collateralized asset can represent the fiat value of the Stablecoin. The Stablecoin collateralized with cryptocurrency assets. A Stablecoin derives its value from a specific asset. In this way, the Stablecoin relates to the Security token
Where can you buy a Stablecoin and Security token?
Being a top-grade Security token development company across the world. expertise in developing a Stablecoin and Security token. So far we delivered more than 50 Stablecoin and Security token to our global clients.
If you are the person looking for the STO website, we people in ICOCLONE will assist you to launch your endemic Security token offering website. Our STO software is fast and secure and you can launch your STO website instantly.
Well if you are interested to do business in developing Stablecoin and Security token, then keep in touch with us!