Security Tokens for Bitcoin Maximalists | by Dave Bradley

Many token buyers have a hard time separating tokens intended as a currency from token designed to operate on a single platform(utility tokens). They choose to evaluate the merits of these tokens like they would a stock on traditional markets. If they like the elevator pitch and the team makes some impressive sounding news releases, then it must be a good investment. What these investors miss is that utility tokens give the buyers no rights against ownership in the company or claims against future profits. All you are getting is the right to use the platform(which may or may not ever exist) at a later date. Most of these platforms don’t benefit from having their own unit of account as most of the participants will always think in other units of account(dollars or bitcoin).

The majority of utility token altcoins add an unnecessary layer of friction to the platforms they were created for. The real reason these tokens are created is obviously to raise funds for the project or it’s creators. Unless the tokens are backed by some kind of obligations or in some way tied to the success or usefulness of the platform, they have no value and nothing to support their price beyond speculation. This cannot be overstated:


Simply issuing a utility token and calling it a security won’t improve its value as an investment.

Security tokens are the next stage in the inevitable financial evolution spurred by the invention of bitcoin. Many bitcoin maximalists are quick to point out that since real world business and assets cannot be trustless, tokenizing companies and their assets does not offer any meaningful innovation.

The main benefit of tokenizing securities rather than listing on traditional markets is the option to disintermediate the mandatory middlemen present in the existing financial system.

When we issue a security as a blockchain token, we are still asking buyers to trust our company(just like any other security offering). We are still asking them to trust the exchanges and custodians that we’ve set up. However, all of these relationships are now optional from the perspective of an issuer. If the terms, fees or requirements of a particular broker, dealer or exchange don’t make sense for a business, they are free to go elsewhere.

Additionally, issuers and tokens buyers are now exposed to a global level of liquidity that doesn’t exist in any single segregated market. The fact that we have a global, trustless method of payment means that buyers have access to a pool of potential investments from all over the world.

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