Utility tokens versus security tokens: what’s the difference? According to Polymath’s Chief Product Officer, the future lies with security tokens because they make the most sense as a financial instrument.
Tokenizing equity is one idea commonly applied to security tokens, but for Polymath’s Chief Product Officer Thomas Borrel, this is just the tip of the iceberg.
The truth is that paper equity tokenization “doesn’t really add anything” to the current space, he says. Security tokens have far more potential than just tokenizing traditional assets. If investors can buy the same exact asset through normal channels, then we can’t realize the full benefits tokenization offers. Instead, tokenization brings entirely new ways to understand money and investments.
Creating New Value
Security tokens can create altogether new value, Borrel argues. One example he gives is the change the concept could bring to vesting schedules. Instead of employees receiving stock options every quarter or even once a year, security tokens can speed up this process significantly. It would essentially allow companies to pay the equivalent amount of dividends on a daily basis.
This simple solution, Borrel argues, provides employees more incentive to stay and is a win-win for everyone.
Right now Borrel is impressed by the speed of the industry. We now know how security tokens fit into regulations much more clearly than just 6 months ago. It’s only a matter of time before they become mainstream in the cryptocurrency world. Once these securities move to their own native blockchains, then people will start to understand the power behind the idea.
Currently, Polymath boasts its own security token standard called the ST-20. Projects can hold STOs on the Polymath platform, but for Borrel, this is just the start. Although things are uncertain still, he argues that a tidal wave is coming sooner rather than later. He’s, in short, optimistic.
Do you agree with Thomas Borrel? Let us know your thoughts below.
Image courtesy of Polymath