First of all we would like to answer the question of, “what is security token?” Security token is the cryptographic token based on Blockchain technology, and it represents financial assets like bond, debenture, warrant and share. If you have security token that means you own part of a company, without taking actual possession of it.

STO Security Token Offering is a financial model like ICO Initial Coin Offering; use to raise the funds for the project which is based on the Blockchain technology. But secure and authentic than ICO Initial Coin Offering. Blockchain start-up companies, use securities to raise the funds from capital market from various investors and in return investors get back their money in the form of dividend or interest rate or share of the company’s profit. And when these things are done through a cryptographic token, it is known as security token. So the entire model, from raising the funds from the market to returning investor’s fund, is known as STO Security Token Offering.

Unlike ICO initial coin offering, STO security token offering is authentic and backed by the real time tangible assets thereby the market value of the STO fluctuates as per the company. In more simple words, suppose you have a security token which is supported by the Amazon then price of the token will fluctuate according to share market price of Amazon. There are three advantages of STO Security Token Offering.

• STOs have no geographical barrier; that influences small, medium and large companies, to represent themselves to international investors over the internet.
• All security token follows the law of SEC and subject to Howey’s test; thereby SEC is authentic and secure.
• Unlike ICO, STO’s sells security tokens, so here the token holders will be treated as shareholders who will have equal rights of shared ownership to the issuance company.