Security Token Offerings are related to Initial coin offerings, where capitalists can directly invest in a scheme in income for the startup's tokens. Tokens of STOs are pegged to real estate safety token such as fiat, bonds, real estate, stocks, etc.
This is the exact reverse of initial coin offerings tokens or coins, where most of them lost all their costs and left backers in big losses. STOs are a means to stop investors from dropping prey to dishonest business ventures.
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Since security token offerings are considered as securities, they are also subject to securities regulations of the country they are launched in and the countries of their investors.
Also, the startups and security tokens offering are highly secure because they are compliant with the governing laws set by the financial jurisdictions in the country they belong to.
Security tokens bought by a backer during the token offering is stored in a cryptocurrency wallet and the Information regarding the ownership of these security tokens is registered on the blockchain.
STOs made a new source for blockchain startups to grow stocks after ICOs failed to find the cause. Businesses that file for an STO automatically demonstrate that they are docile with management and thus attract more backers to invest in its tokens.
As security token offering gain more credibility and popularity, institutional capitalists are also moving and investing in security tokens, which marks yet another achievement for blockchain management.