Find out what security tokens are, the most secure blockchain technology

Have you heard about blockchain technology and tokenization, but you have questions about the meaning of the many concepts that revolve around them?

In this article we want to tell you about the main features of security tokens , the tool used by the Tokenchampions team to democratize the access of all fans to the management of the image rights of professional football players.

Before we explain what security tokens are, let's rewind. Let's start at the beginning. Where do they come from?

The background

Blockchain is a growing technology that has the potential to revolutionize different professional areas. That scope is mainly based on its ability to offer people a reliable channel in which to transfer value or real assets (tokenization) over the Internet.

This technology, which also includes security tokens, makes it possible to establish a high level of trust in a space, such as the Internet, where we do not always know what happens to our data.

What is tokenization?

Tokenization is the transformation and representation of an asset or object within blockchain technology. To achieve this, the asset or object itself is digitized and all this information is transferred to a block of a blockchain .

Once registered, this asset can be exchanged, stored, or manipulated through tokens, which are used as a unit of value to operate in Blockchain.

The great advantage of tokens is that they give "more power to their users to interact with their products, while facilitating the distribution and sharing of benefits among all its shareholders", as defined by William Mougayar, author of the book The business blockchain .

In our case, Tokenchampions tokenizes the image rights of future promises of the beautiful game with the aim of facilitating the access of all fans to the football business.

In other words, tokenization is a tool that blockchain technology makes available to all citizens so that we can easily operate in the financial markets without the need to resort to intermediaries.

So, what is a security token?

A security token is a type of token, also cryptographic like utility and equity tokens, but which are linked to traditional security tokens: that is, they are linked to financial securities.

Security tokens are an exchangeable financial asset, like bonds, swaps, futures, etc. and are currently very common in the blockchain universe.

The goal of a security token is to offer rights very similar to traditional shares, allowing to reach a wider audience, eliminating bureaucracy and slowness.

A security token is considered as such as long as it meets these four requirements:

1. There is an investment of money.
2. There is an expectation of profit.
3. The investment is in a common enterprise.
4. Any profit comes from the work or efforts of a promoter or a third party.

Tokenchampions security tokens are a digital representation of an established investment instrument, in this case, a Luxembourg-based investment fund.
Unlike
a cryptocurrency, Tokenchampions tokens cannot be acquired by anyone, but only by qualified investors who comply with the regulations applicable to this investment instrument.

As stated in this article in Cinco Días, "blockchain technology guarantees transparency and efficiency in the transfer of these tokens [security tokens], reducing the bureaucracy required for their transmission, making peer-to-peer transmission easier for the person investing or wishing to dispose of their security tokens".

Tokeny, Tokenchampions partner, reminds that security tokens are regulated and, in most cases, backed by underlying assets: "STOs (Security Token Offer) can produce a regular return for their holders, while providing more stability and guarantees for investors."

Thus, security tokens are heavily regulated by the relevant laws and regulations in each jurisdiction, both when they are issued and when they are distributed.

What did you think of this Tokenchampions article about security tokens? Did we help you to clarify concepts? You can find the original information on the Tokeny website. The Tokenchampions team encourages you to share this article on your social networks and remember that you can also follow us on LinkedIn, Twitter, Instagram or Facebook.