The rise of asset-backed tokens

The rapid changes taking place in the FinTech framework are making investors around the world both excited and wary. There are new buzzwords...

The rapid changes taking place in the FinTech framework are making investors around the world both excited and wary. There are new buzzwords popping up every other day and investors are trying to keep up with all the changes and developments to the best of their abilities. ‘Bitcoin’ and ‘blockchain’ have been some of the most popular buzzwords of the previous years and they deserve to be. They have revolutionized the entire framework of financial technology and have a lot of promising potential for development of a thoroughly decentralized financial system. As Bitcoin continues to scale hitherto unheard of levels in the financial world, more and more people are beginning to develop their interest in the brave new world of cryptocurrencies.

The blockchain technology was the underlying component in making the cryptocurrency the huge success it is today. The absolute enormity of this technology and its implications are still being explored and studied. The immensity of the applications to which this technology can be applied has made blockchain technology an invention at par with the greatest of our times. That this exciting technology has the potential to touch every imaginable aspect of human endeavor has been acknowledged by all.

ICOs as a way to success

New ventures which are working on the blockchain technology have found an innovative way to raise funds for their businesses. They hold an Initial Coin Offer (ICO) wherein they issue coins or tokens to the interested investors. These tokens can be purchased using other cryptocurrencies or fiat money and they can also be made tradeable.

ICOs have recently gained a lot of traction and ventures have been able to raise millions of dollars through them. It eliminates the need of any intermediary and the capital raised is only for the company to use. There are, however, certain concerns when it comes to such ICOs and the tokens that are issued through them.

The first important problem that is observed is that investors are jumping onto the boat without actually knowing the destination. Not many investors have the required knowledge about the technology that the company is dealing with. They don’t know what the company intends to do with the money. The words ‘blockchain’ and ‘cryptocurrency’ seem to put their minds at ease and they seem to be sure of high returns, no matter what the company does.

Secondly, the tokens issued by the businesses are not backed by any assets. It means that in case the business never takes off, the invested money, be it in the form of fiat money or cryptocurrency, may just vanish without any trace. Most of the businesses do not offer any security against the token issued by them. They may offer a return on the investment in the form of a share in the profits, like dividends. This also acts as a barrier for many smaller investors who are relatively unaware and invest only when there is a certain sense of security. Lastly, ICOs aren’t regulated by any governing body.

Asset-backed tokens are the next step

As ICOs are still a relatively new method of financing, it is going through developmental changes and is also evolving simultaneously. Companies have realized that if the tokens issued by them were to offer some sort of security, it would act as a motivation for more investors to invest. Thus the concept of asset backed tokens came into being. These tokens are secured by physical assets such as land, gold or any such asset which has been traditionally used as a backing for financial securities. These tokens are secure and they command greater trust and value. The investors are eventually going to require some assets to back the tokens being issued and it won’t be long before all tokens that will be issued will have some sort of backing, if not only physical assets.

These tokens will represent true value and it will eventually lead to formation of token exchanges which will be regulated and secure. Some ventures have already begun the process of issuing asset-backed tokens. New and upcoming ventures will be in a much better position with their tokens backed by assets. This is likely to become the norm for ICOs in the coming future as well. But as of now, it seems that the average investor in ICOs isn’t too concerned about tokens not being secured by physical assets. In any case, asset backed tokens are bound to pick up pace, sooner or later.

Watch the full presentation of Reinhard Berger here:

How to make the right choices

To an average investor, looking inside the blockchain tent can be an overwhelming and at the same time a fantastical experience. The awe-inspiring and often confusing technical garb that surrounds cryptocurrencies and ICOs of blockchain-powered business ventures can be an obstacle for the mindful investor. It is easy for such investors to be caught in the “crypto trap” and lose money on scams and hollow ICOs, just because the only thing they promised was an investment into the wonderful world of blockchain and crypto.

Pecunio helps demystify the new digital financial age of blockchain. It is a one-stop investment destination for any kind of investor; be it a non-tech savvy investor, a high equity investor or venture capitalists who wish to leverage the promise and exciting opportunities of wealth and value creation through ICOs.

Pecunio’s asset-backed gold token

Pecunio is miles ahead of its competition in offering a comprehensive set of services that does all the hard work so that you benefit from the potential windfall. With a range of investment opportunities hand-picked by our experts, you know that you can chose from the best possible options available in the wide world of blockchain-backed ventures.

We are coming up with our own asset-backed token — the Pecunio Gold Coin (PGC). Every PGC token represents 1 gram of segregated, unallocated gold from refineries or gold certificates approved by the London Bullion Market Association (LBMA). The gold or gold certificates will be held in Pecunio’s or its appointed partners’ custodial vaults via the Proof of Asset Protocol. All gold follows 99.99% LBMA-approved standards.

The PGC will be introduced in May 2018 and will have very low transaction fees. Pecunio is also offering pickup service in Dubai and Zurich for this exciting new entity that will assure the opportunities of cryptocurrencies and the safety and security of an asset backing.

With more and more people trying to jump onto the crypto bandwagon, Pecunio is aiming to be a beacon to guide investors to reap the awesome benefits of this new and exciting asset class. With asset-backed tokens like the PGC, Pecunio is marrying the best of both the traditional types of investment instruments as well as cryptocurrencies to help investors create wealth.

Source: Medium

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