Here is an insightful look into the future possibilities of security tokens, written by Matthew Finestone at the end of 2018. While many of the ideas have not come to mainstream fruition, much progress has been made since.
From the article:
Unique to blockchain tokens:
Asset Interoperability
Programmable Compliance
Easier with blockchain tokens:
Fractional Ownership
24/7/365 Trading
Rapid Settlement
Reduced Costs
Interesting, desirable assets foster liquidity.
As we just saw, tokens allow for compliance, automation, and interoperability all across the securities stack. Is this enough to be 100x better than equity or debt crowdfunding platforms?
I’d say that, on their own, each benefit does not move the needle enough. But, in terms of reducing friction, the efforts are multiplicative, and go a long way in facilitating trading of private securities.
To be honest, I can somewhat empathize with security token skeptics. It’s easy (maybe not) to see that blockchain’s (Bitcoin’s) killer app is digital bearer instruments, where truth is purely on-chain. The most valuable thing about this type of property (money) is that it is trustless, and censorship-resistant, and un-inflatable, etc.
I think it will become increasingly obvious that financial assets will tokenize. It’s an accounting technology, it should be no surprise that we use it for…accounting. Then one day… We won’t call them security tokens, we’ll call them securities.
This part is also fascinating: