Tokenized Securities: are they worth the hype?
By: Jason Cameron
Tags: Cryptocurrency, Blockchain, ICO, Ethereum, Bitcoin

I’m not sure if you’ve noticed…but talk about tokenized securities is increasing. Not everybody is talking about it, but more people are.

In my last post I gave a brief and simple summary on what tokenized securities are and 3 ways they will revolutionise traditional securities as we know it. If you haven’t read it, you can check it out here.

In short…I believe the hype.

Now this is probably no secret if you’ve been following me for a while and let me share with you 3 reasons why I’m bullish on tokenized securities and what I’m currently doing about it.

Let’s get into it…

#1 The project’s financial success is my success

I’m not going to ‘forget’ utility tokens or think they are no longer worth investing in. I’m still bullish on utility tokens with the right elements, however a question I’ve always had is, what happens to my tokens if this project is acquired? Would the value go up? Down? Would I even benefit? The truth is, I don’t know. So for a utility token to give me any security in the long term, the token has to be an integral part of the project — that it cannot function without it and is attached to the value of the token.

With a security token, however, especially one that is equity based, it’s clearer to me what happens in a scenario like an acquisition, the bottom line is that I benefit. I like this. Additionally, if tokenized security provides a right to cash flow, then again, I know that if the project grows, there’s a direct link where I benefit, my ROI grows too.

#2 Value is driven by team performance, not just supply and demand

What grabs my interest about tokenized securities, is that there are two factors that impact it’s value. Firstly, fundamental economics, supply and demand, the more people who want this token the higher my token value goes.

But what if the demand isn’t there and the team is killing it? Signing big customers, growing sales, releasing new products? If it’s a utility token, there is not always an impact on the value, however if it’s a tokenized security with equity or cash flow, then it’s value will go up in the eyes of a potential buyer or my cash flow would increase. So I love the idea that the value of my token is not purely backed by speculation but also by the performance of the team, which makes team selection more critical.

#3 Backed by an asset

This is probably the most obvious reason, which is not a top priority for me in particular but it is a key factor. The reason I think this is key because with utility tokens, you don’t own a piece of the company and the utility is not usually realised when you first invest in this kind of project. So what backs the value of a utility token, especially in the first 12 months or so, typically, is pure supply and demand…pure speculation.

Now speculation is not bad, I can still make a lot of money on pure speculation, but if I’m new to crypto or used to investing in traditional assets, I won’t really get it. But I will get investing in a tokenized security and would feel comfortable in the fact that it’s regulatory compliant. In short, it’s simple and easier to understand. So if it’s easier to understand, my guess is that a lot of money will also go that way.

I do believe there is a strong case for utility tokens and I will continue to invest in the ones I believe have long term merit. I still believe it’s an extremely valuable market, which I can still make a lot of money in long term, however I can’t deny it feels good to own a piece of a company. And if I feel like this, so will a lot of people who don’t get crypto but do traditional assets.

So in summary, I’m actively researching and taking positions in this space. I’ll also be sharing the STOs (Security Token Offerings) and projects in this space I review in the coming posts, so be sure to follow this medium to ensure you don’t miss out.

What do you think? Are you bullish on security tokens or are you avoiding them altogether? Let me know in the comments below.