ICO was so last year. In the US anyway. The implications of this are both depressing and encouraging at the same time. For retail investors, among other things, this means shaking out the scammers and the bad actors. Yet, in many cases, it also means shaking out the retail investors. These days, just because a company holds an STO doesn’t guarantee them success.
Make no mistake, security tokens are harder, lengthier, and costlier to launch than utility tokens. Once you’ve gone through the whole tedious process, you can’t currently get your security token listed on any exchange. Since large exchanges like Binance fall under the purview of the regulators and the SEC when they list a security token, no one wants to list them.
But this is all about to change and, according to Trevor Koverko, securities tokens are “The next mega trend in crypto.” I caught up with the Polymath CEO–the largest securities token platform out there right now–at the World Blockchain Forum in London earlier this month to find out why securities tokens are the next big thing and what he–as an investor in Ethereum, EOS, and ShapeShift–personally looks for in new projects.
Hockey Stick Growth Is Coming For Security Tokens
Trevor is so excited about securities tokens because they represent a speck on the crypto radar right now. But the ability to turn paper contracts, bonds, LP shares, real estate, and more, into programmable contracts on the blockchain holds incredible potential. “It could eliminate your entire back office,” he says.
Moreover, with the SEC labeling the majority of tokens as securities, issuers, whether they like it or not, will have to start thinking this way. With Polymath “breaking Telegram,” capping out with a group of 50,000 users, they’ve amassed a large community. Their board of advisors includes Patrick Byrne, Anthony Di Iorio, and Erik Voorhees. Why is everyone so interested in Polymath?
The Polymath platform provides issuers with the technology to launch their own security token–the ST20–that Trevor believes will be the new standard for securities tokens. “We’re the Ethereum of securities tokens,” he says.
Better than that, any non-technical person can launch their own token in a few clicks without having any knowledge of programming. Trevor believes that Polymath will enable trillions of dollars of financial securities to migrate to the blockchain.
What Does He See as the Keys to Success?
“A few things. I start with the team. That’s absolutely number one. No matter what, if the team’s dodgy then that’s a no.” But, do they have to be people he’s heard of? “That helps, yes,” he says, “the background is really important to me. I need people that are dedicated to the project.”
But before you think endorsements from well-known people, Trevor, and most sensible investors, can see right through that. “There’s a lot of projects that have a celebrity face and they don’t do the work. They’re just the name of it and everyone likes to have 12 projects on the go. I prefer projects like Polymath which is my only thing. I’m the founder and the CEO and I’m dedicated to it and I like projects like that too.”
Beyond that, next up are the terms and structure. “The valuation, the mechanics of a token, the circulating supply, how that changes over time. All the mechanics of the token are very important to me,” he says.
“Tech, obviously, that ties into the team. You need to have a technical innovation or there’s almost no point. I also like being able to market. If you can’t stay relevant and distribute your idea and build a community, that’s an issue because crypto is all open source distributed. You have to have the ability to build the movement and build the community.”
So, to summarize:
- A real team with actual advisors who get their hands dirty
- Dedication to one project
- A clear, logical outline of the mechanics of your token and how the supply changes over time
- Strong underlying technology
- The ability to market yourself and stand out from the rest
The security tokens market is far from perfect, like a lot of things in this industry, we’re building the airplane as we fly. But Polymath is already partnering with key exchanges tZERO, Hyperion, and OpenFinance to provide liquidity to security tokens.
They’re providing the platform to make the technical side easier, and as for the elephant in the room, the part where anyone can invest regardless of location or economic status?
Trevor is enthusiastic that the rules will change. “I think that these rules need to be updated. Just because you have money doesn’t mean you’re an intelligent investor.”
Security tokens are about to take off, so you’d better make sure you’re ready.