Since five years of first ever ICO launch, it has raised more than $3.7 billion until December 2017. The year 2017 represents the upsurge of the funds raised with this new funding method. This chart showcases the cumulative growth of ICO. $5,642,588,112 is the overall extent of money raised from ICOs in 2017.
The traditional stock market was designed to be more/less predictable. There are no limits on the number of stocks of a specific organization. An additional portion of stocks can be issued at any time. It assures steadiness when supply as well as demand ratio shifts. On the opposing, utmost cryptocurrencies have a hard cap. i.e. Bitcoin is restricted to 21 million tokens, and this insufficiency drives the value up as the currency moves closer to mass-adoption. This kind of gap flanked by traditional and cryptocurrency markets removed by Security tokens.
In the base of this new paradigm of fundraising is the token and the tokenization of digital/physical assets. The security token signifies a tradable element of real-world value as well as offer a blockchain-assured transaction record. Blockchain connects multiple parties in the network of trust and reliability. It facilitates the transfer of assets as well as the detail regarding the assets.
Clearer rules and a regulatory framework are needed for Blockchain businesses for the securities which already exists. By getting cryptocurrency and institutional investors together in a highly liquefied, worldwide market, security tokens could bring the major shift in the world of asset and token exchange.
Challenges with the traditional approach
It needs an epic investment to earn money in security token exchanges. You can earn good amount if you also start with the little with patience. But complexity and low ROI will make think twice for the investors to enter in the market.
Though some trading applications such as eToro have made it effortless for unfamiliar investors to enter the market, you never own the crucial asset as well as trading will be expensive with spreads. Just like that if you need to invest in any property via a crowd funding website, your investment is tied up in a market. So whether its CFDs or crowd funding, it will not be the perfect option to traditional trading.
You might not have enough fund to purchase a share as per the size and type of asset you want to invest. You also need to spend for brokers or funding managers to buy or sell an illiquid yet desirable asset like fine art.
