What is Security Token?
Security token, with its Turkish equivalent, security token, refers to the type of token that has a financial value and that the assets in the traditional financial system work on the blockchain. Security tokens represent assets such as stocks, bonds, real estate and digitally prove their ownership rights. Security tokens have to comply with current regulations while enjoying the transparency, security and efficiency benefits provided by blockchain technology. Therefore, security tokens are subject to more regulation and control, unlike utility tokens.
What are the advantages of security tokens?
The most important advantage of security tokens is that they provide global reach by digitizing traditional financial assets. Thanks to security tokens, investors can easily invest in any asset they want from anywhere in the world and in return receive a token saved on the blockchain. These tokens can include additional features of the asset such as revenue sharing, voting rights, as well as proving ownership rights.
Another advantage of security tokens is that they reduce transaction costs by reducing the role of intermediary institutions. In the traditional financial system, various intermediary institutions come into play for the buying and selling of securities, which incur additional costs such as commissions, fees and taxes. Security tokens, on the other hand, can be transferred directly between the buyer and seller on the blockchain, reducing transaction time and costs.
Another advantage of security tokens is that they increase liquidity. In the traditional financial system, there are certain market hours, restrictions and conditions for the trading of certain assets. For example, some assets, such as real estate, are low in liquidity and it may take a long time to sell them. Security tokens, on the other hand, can be traded 24/7 and have a global market. In addition, security tokens can be fractionated, that is, divided into small pieces. This reduces the minimum amount required to invest and allows more investors to participate in the market.
How to get security token?
To get a security token, you must first choose a security token platform. Security token platforms are organizations that provide the necessary infrastructure for issuing, trading and managing security tokens. Examples of security token platforms include Polymath, Securitize, Harbor.
After choosing the security token platform, you need to find out on which blockchain the security token you want to invest is running on. Because in order to get security tokens, you need to create a wallet compatible with that blockchain and transfer the necessary crypto money or fiat money to this wallet to get security tokens. Security tokens usually work on the Ethereum blockchain in accordance with standards such as ERC-1400, ERC-1404. In this case, you need to create an Ethereum wallet and transfer ETH to this wallet to get security tokens.
After creating an account on the security token platform and transferring money to your wallet, you can select the security token you want to invest in and place a purchase order. When your buy order is executed, your security tokens are sent to your wallet and your ownership rights are recorded on the blockchain. You can also place a sell order on the same platform to sell your security tokens at any time.