Velocity of Security Tokens

In every single work speed brings about success. Fastness in everything work is required because it is such a quality which increases efficiency of a work indeed and this efficiency brings outrun to light. In financial market because of competitive advantages speed is required. Several competitors remain lag behind in competition because of the lack of speed. A congregation of entrepreneurs, investors and traditional financial representatives help to form this new type of asset will take. Ranking the supposed benefits of security tokens and grouping the participants are one of the tasks. There are three assumptions about the speed of security Tokens among them one is it is a technology issue, another is the blockchain confer speed and the other is this speed is desirable.

No Priority to speed

Because of risk reduction we need faster transaction. If a trade is hung for a higher period then the risk definitely is higher. Trading markets has already been devoid of the problem with a Central Clearing Party or CCP. But hence there is a risk like when your trade is on the way, CCP will disappear. But it is a matter of regression that CCP figure is not available in Security Tokens market. As cash could be used effectively so quick transaction would also be desirable but it is not fully true. In this methodology on the off chance you manage money on behalf of others then it won’t be acceptable as blockchain tech promises for instant settlement that you would need to have your fund deposited at any broker and even if you have return on that then it would be lower compared to you could get elsewhere.

Blockchain are not fast

Blockchain technology involves validation of a transfer by the entire network relying on the pertinent blockchain’s consensus algorithm. The technology is less faster compared to centralized databases. Private blockchain has also another issue which is it has some degree of evanescence. Nanosecond is required for a transaction in a traditional market. So settlement is not faster.

Technology Issue

In the steps of blockchain-based settlement there is a number of steps and middlemen which is not an issue of technology. They are upgrading themselves facing several problems and circumstances. But fact is that instant settlement is not a big deal here and isn’t desirable. Solving the problem with technology which is lower is fully unrealistic. So finding their asset is unexpected.

What Necessary?

It’s very much unclear what steps to take to reform capital markets through the speed of blockchain-based assets and settlement. But if standards are adopted towards the sector for Regulators should be more alert to prevent fraud. Immediate payment system should be there which is devoid of fiat transferring. For reliable transfer of ownership and rights, smart contracts need to be developed. But still there is no guarantee for security tokens to be faster.

Leave a Reply

Your email address will not be published. Required fields are marked *