Security tokens are crypto coins that represent a real asset, such as a share or a bond.
The only difference is that ownership is not settled and confirmed via paper, but via a blockchain, a “digital ledger”.
Security tokens offer the investor various financial rights such as profit dividends or equity. At the same time, Security Tokens always have a clear financial incentive and are regulated by a financial market supervisory authority.
What becomes possible thanks to Security Token? Example:
While owning real estate tends to be exclusive for the wealthy, fractional ownership with tokens can allow those with less financial resources to buy into an apartment.
If someone wants to get out, he can simply sell his share in the form of a token on a marketplace. The same model can be applied to other illiquid assets, such as art, classic cars and racehorses.
Currently, the volume and demand for security tokens is very low. There are two main reasons for this. First, there are only about two dozen such token projects and second, there is currently a lack of available exchanges on which to trade these securities.
However, both of these things could quickly change for the better, as several exchanges and also new interesting security token projects are in the starting blocks.
For example, the Swiss exchange SIX is launching such a Security Token compatible exchange called SIX Digital Exchange (SDX) this year (Q2-3 2021).
The Swiss exchange SIX expects its traditional trading platform to be overtaken by blockchain technology within a decade. Although stock and bond trading on SIX and most other exchanges is now fully electronic, the underlying processing steps are often based on old paper and postal protocols. “The existing system could be completely replaced by the digital exchange in about 10 years,” said Thomas Zeeb, head of securities and exchanges at SIX.
The SIX Digital Exchange (SDX) will initially run in parallel with the existing SIX platform, where a purchase or sale of securities is processed in three steps and often over several days. Two of these steps can disappear thanks to the use of blockchain technology, meaning a transaction can be completed in a fraction of a second.
Other exchanges, such as Stuttgart, Singapore and Nasdaq (New York), have also recognized the potential for greater efficiency and are launching digital versions of their official exchanges. This could eventually provide the necessary boost to bring volume, demand and confidence to the trading of regulated digital securities.
Security tokens are crypto coins that represent a real asset, such as a share or a bond.
In a market where there are over 6000 different cryptocurrencies, there are actually individuals who believe that all but one cryptocurrency will disappear over time. These individuals are called Bitcoin maximalists.
The belief of this group is that all other crypto assets are inferior to bitcoin and that bitcoin is the only winner in a winner-takes-all world. The end state is “hyperbitcoinization,” where the entire global system of money, value transfer, and trusted property will take place on the Bitcoin blockchain.
In this, Bitcoin is like the Gallic Village, the only stronghold that will remain in place in the financial chaos of money printing and government intervention.
Bitcoin offers a world where inflation is not driven by central banks, but only by cyclical demand and supply. Every citizen is their own bank and the entire financial industry disappears as everything is done decentrally with Bitcoin and the Bitcoin blockchain, with no third parties required at all.
This is a compelling future for many. It is a chance to start a revolution. It offers people the opportunity to control their own lives.
However, there are other extremely exciting crypto networks and blockchains outside of Bitcoin. Bitcoin is enormously secure and trustworthy, but this comes at the cost of speed and functionality.
However, almost all alternative blockchain solutions are also suboptimal for various reasons: speed, trust level, cost, flexibility, etc., and therefore there will likely be multiple winners (and even more losers).
Moreover, different blockchain and crypto protocols serve different needs. Not every decentralized network needs to be as trustworthy as Bitcoin, for example.
Therefore, the many different projects are not really in competition with each other, they rather complement each other. They all aim to solve different problems.
And together they form the digital asset ecosystem, which is many times larger than any one of these ecosystems taken on its own.
In the future, we probably won’t see or know which protocol is executing what. The new decentralized internet based on blockchain technology will simply work. How is this possible?
There will be an interoperability layer built on top of it that connects everything together. Any kind of network can be connected.
That’s interoperability – seamlessly connecting everything into something user-friendly. And this missing piece of the puzzle, the project that enables interoperability of networks already exists and is continuously gaining popularity.
2020 was a turbulent but very successful year for digital currencies and protocols around Bitcoin, Ethereum and Co.
The overall value of the crypto market has recorded a steep increase and this despite or even because of the global COVID pandemic.
1. Digital central bank currencies (CBDC`s) are emerging.
The Bank for International Settlements (BIS) recently released a report showing that 80% of the world`s central banks are working on some form of digital currency.
This process will continue to intensify in 2021, driven by the steady decline in the use of cash and the ongoing digitalization of the economy.
In this context, combating money laundering and the financing of terrorism are among the purposes of issuing a digital central bank currency.
To achieve these goals, a digital central bank currency must be convertible, easily accessible, and inexpensive. The underlying system should be resilient, available 24/7, flexible, and secure for the general public.
A Digital Central Bank Currency has the ability to influence monetary policy much more than cash. Think, for example, of varying real-time taxation for individuals or companies. It also allows for varying interest rates and creates general transparency of all money flows.
Digital central bank currencies will become a reality in 2021.
2. Unregulated coins are getting in trouble
A stablecoin is the class of cryptocurrencies that attempts to provide price stability by being tied to an external value such as the U.S. dollar or gold.
Stablecoins currently act as a sort of lifeline for many citizens in countries with hyperinflation or strict currency controls.
However, unregulated stablecoins such as Tether (1 Tether = 1 US Dollar) are experiencing increasing regulatory pressure from the US government.
As a result, a new regulatory draft calls for a banking license for stablecoin issuers like Tether.
Other cryptocurrencies such as Ripple are also facing increasingly stringent controls. The U.S. Securities and Exchange Commission classifies Ripple as a security, not a currency. If a coin fails to register and regulate, but is classified as a security by the financial authority, this is a violation of the law. Ripple will not be the only coin to come under regulatory investigation this year.
3. More mainstream acceptance
Last year has already seen a remarkable development in Bitcoin adoption. Prominent fintech companies such as Square and MicroStrategy invested a large part of their cash reserves in Bitcoin. In addition, payment service provider PayPal has allowed its more than 300 million users to buy and store Bitcoin.
In 2021, we will likely see an expansion of this mainstream demand. One reason for this is the steady devaluation of sovereign currencies such as the U.S. dollar.
4. The breakthrough of security tokens
Security tokens cannot get a lawsuit like Ripple got, because they are regulated and approved by a financial market regulator. Investors get a chance through Security Tokens to become a shareholder of a company, a property or a painting. These shares can be divided into very small units (coins/tokens) and are easily transferable. Currently, more than 20 companies are working on setting up special regulated exchanges to make security tokens tradable, including the SIX exchange in Switzerland. A large number of these exchanges will be launched in 2021 and thus create an upswing in the field of security tokens.
An independent report by the Managing Director of Citibank describes Bitcoin as the digital gold of the 21st century.
The constant devaluation of the world’s current reserve currency – the US dollar – forms the basis of this argumentation.
The report points to clear analogies between the 1970 gold market and Bitcoin.
History of money and gold
The 1970 bull market in gold was launched in 1944. After the Second World War, forty-four countries signed the Bretton Wood Agreement, which shaped the global currency market until 1973.
This agreement pegged the US dollar to gold and all other currencies to the dollar. It attempted to establish a regime in which the US dollar was equivalent to gold as a reserve currency.
And the USA was quite successful in realizing this vision.
However, with global industrialization and the inflation of the US dollar, the preference for gold and other currencies began to grow. This triggered a gold rush in 1970, when people began to exchange their bills for the precious metal. In 1971, US President Richard Nixon broke the link between greenbacks (US dollar notes) and gold and this then led to the emergence of the Fiat regime we know today.
With the resulting relatively free currency market, the price of gold rose enormously over the next 50 years.
Currency inflation and the devaluation of the greenback form the basis for Fitzpatricks’ comparison of Bitcoin to gold. The report says:
“Bitcoin was created in the wake of the great financial crisis (of 2008), which brought about a new change in the monetary system when we switched to zero percent interest rates.
Fitzpatrick points out that Bitcoin’s first bull cycle from 2011 to 2013, when it rose 555 times, is a result of this.
Currently, the COVID 19 crisis and the associated monetary and fiscal responses of the government are creating a market environment similar to that for gold in the 1970s. Governments have made it clear that they will not shy away from unprecedented printing of money as long as GDP and employment figures do not rise again.
The above analysis is music to the ears of every Bitcoin enthusiast. What has often been preached in the crypto forums is finally becoming reality.
Hyberbullish Bitcoin targets
But Fitzpatrick is not stopping there; his price forecast chart shows the Bitcoin price at $318,000 by December 2021.
The four-year bull and bear cycle after 2011 and the ascending parallel channel since 2013 forecasts growth of 102 times from the low of $3,200 in 2018 to December 2021.
“The price movements over the last seven years have been very symmetrical and have formed a very well defined channel that will allow us to follow an upward trend similar to the last rally (in 2017)”.
Bitcoin prices will most likely appear exaggerated to traditional investors. Nevertheless, the basic theory of a paradigm shift in the global currency market is not new. The US economist Ray Dalio (https://de.wikipedia.org/wiki/Ray_Dalio) has indicated the devaluation of the US dollar and also a paradigm shift.
Bitcoin could be the missing piece of the puzzle in this new paradigm.
In addition, the mere fact that such a Bitcoin price target is issued to the institutional clients of the largest American bank is very positive.
Since December 2017 (ATH of Bitcoin of $20,089) there has not been such a high influx of new users nor such a high change of ownership (buy – sell) as in the last days. Thus, the Bitcoin price has risen from $13,000 to $16,000 (+23%) within a short period of time. This is a serious and promising development.
Short term (next 2 weeks): consolidation expected, then upward trend.
Medium term (next 3 months): Investor activity continues to increase, positive.
Next 3 months: Investor activity is increasing.
The chart below shows the trend of increasing investor activity. All macroeconomic rises require an increase in the circulation speed of coins. This is just a fancy way of saying how much of the total supply changes hands and is directly related to the purchase of new investors.
The current set-up is positive in the medium to long term.
The next 2 weeks : Optimistic, but consolidation is expected.
It is expected that a significant number of investors will take profits, which will hinder an immediate rise in the price of Bitcoin. The consolidation of Bitcoin could give the Altcoins time to rise.
The price movement in recent weeks has been entirely organic, driven by significant buyer demand. This was not due to the usual hedge fund trader-driven actions on derivatives exchanges. This is very healthy and positive for the market and the price.
Stay tuned !
How many people actually own crypto?
Over the last three years, the Cambridge Centre for Alternative Finance (CCAF) has been monitoring and analyzing the development of the global crypto industry.
The industry has changed significantly since then: the bubble of the first public token offerings(ICO) (2017-2018) has led to closer attention by regulators, resulting in greater efforts to comply with regulations. In addition, new professional infrastructures and services have emerged, as well as increased interest from institutional investors.
For the 3rd edition of its Global Cryptoasset Benchmarking Study, the CCAF collected data from 280 sources in 59 countries. Here are some of the findings:
Number of crypto users
The CCAF estimates that the total number of cryptoasset users is approximately 101 million individual users and 191 million accounts opened with various service providers by the third quarter of 2020. In 2018, the number of identity verified cryptoasset users worldwide was estimated to be around 35 million, so the sector has grown dramatically since this report.
This does not include users who have created a wallet anonymously for themselves. The exact number of crypto users is probably even higher.
Institutional users on the rise
According to the report, cryptoasset service providers with operational headquarters in North America and Europe report that business and institutional clients account for 30% of their clients – a significant portion of the sector.
The CCAF report indicates that about two-fifths of the companies surveyed have a license or are in the process of obtaining one as regulation is catching up. These companies are mainly based in Europe. The percentage of companies that manage digital assets but do not perform customer data checks has fallen dramatically from 48% to 13% compared to the 2018 report.
With regard to crypto-mining, the report claims that 39% of the PoW (proof of work) mining is powered by renewable energy. The CCAF study also found that 52% of ASIC computing equipment sales in 2019 went to Chinese mining companies.
Stablecoins on the rise
The use of Stablecoins is increasing according to the report, with the proportion of service providers supporting tether increasing from 4% to 32% between 2018 and 2020. (Tether ( short USDT) is a digital currency whose price is linked to the US dollar).
We are pleased with these figures and developments and hope that crypto adaptation will continue in a similar fashion.
You can find the complete study here: