Do you want to invest in cryptocurrency but want something with more stability and intrinsic value? Then, you should consider investments in security tokens.
In a nutshell, security tokens are a subset of digital tokens and represent a share in an underlying real-world asset, often tied to a project or investment, such as commodities, real estate property, bonds, and stocks on blockchain technology.
More so, investors in security tokens own a stake in a newly launched project or investment. Hence, just as the name suggests, these tokens give you a level of security in what you are investing in.
Presently, security tokens also referred to as security token offerings (STOs), are still in their growing age as promising investment tools. To help you make the best move, let us consider some of the best security tokens crypto to look out for in 2024.
What Are Security Tokens?
Before we dive into this fascinating article, let us quickly understand what security tokens are.
Do you remember initial coin offerings (ICOs)? Security token offerings (STOs) operate in a similar way. Just like with ICOs, investors in STOs own a stake or share in an underlying real-world asset, which can be commodities, real estate property, bonds, or stocks.
STOs are created via a process known as tokenization. Tokenization transforms the tangible underlying real-world assets into digital representations on a blockchain network.
Hence, a security token grants its holder certain rights, which include ownership, profit sharing, voting, etc.
However, security tokens operate under regulatory frameworks, unlike ICOs. They comply with government regulations and ensure compliance with securities laws. This gives STOs the same safeguards as traditional securities.
That means institutional investors in STOs would enjoy a level of security that may not be available in other types of tokens, such as crypto tokens and utility tokens because STOs have undergone scrutiny and comply with certain legal standards.
Also, these tokens utilize blockchain to record transactions for greater traceability and transparency. By using decentralized ledgers, it becomes almost impossible to tamper with ownership records.
Currently, security tokens have a total market capitalization of about $15.5B, according to Security Token Market.
Also, some cryptocurrency exchanges, including Binance, Bybit, and Kraken, have begun to list security tokens alongside other altcoins. This makes it easier for institutional investors to access this emerging asset class.
The Best Security Tokens Crypto
Now, let us discuss the five best security tokens crypto in 2024.
Blockstream Mining Note (BMN)
The first security token on our list is the Blockstream Mining Note (BMN).
BMN is an EU-compliant security token issued on the Liquid Network. It offers accredited investors access to Bitcoin mining without the need to set up and manage their mining gear.
Aside from giving you the right to mine Bitcoin, BMN investors will also enjoy added liquidity on their locked-in tokens on the Liquid Network.
Usually, setting up a Bitcoin miner is not only expensive but also requires technical know-how and expertise in the day-to-day management of the rig. However, you can easily buy BMN rather than buy and maintain a mining rig.
Each BMN represents a prepaid hash rate contract with Blockstream Services Canada. This gives you the right to a share of the BTC that is mined over the contract’s duration – usually 36 months.
BMN is one of the best STOs, especially if you want to tap into cryptocurrency mining without the inherent technical complexities.
Enegra Group Token (EGX)
Enegra (EGX) comes next on the list. EGX has a market cap of $14.7B, which is an overwhelming majority of the STOs’ overall market cap.
EGX enables commodity miners in emerging markets to compete globally via world-class trading expertise, risk management, logistics, and governance
Enegra (EGX) stands out as a tokenized equity in Enegra Group Ltd, leveraging the ERC-3643 compliant EGX security token on the Polygon blockchain.
EGX represents 100% of the equity in Enegra Group Ltd, with shares held by a licensed Trust Company as Nominee on behalf of EGX token holders.
This structure ensures that all rights and distributions, including voting and financial distributions, are passed on to the token holders. To hold EGX in a self-custody wallet, investors must complete KYC/AML checks and agree to the EGX Terms & Conditions.
Meta Music Token ($MMT)
The next STO on our list is the Meta Music Token ($MMT). But mind you, this token has no connection with the Facebook parent company, Meta.
MMT enables you to earn a share of music royalties. The Meta Music ecosystem is funded by investors and allows music artists all over the world to bring and market their music and albums on the Algorand blockchain.
In return, investors earn a share of the royalty fees generated on the album sales, while the artists keep the vast majority. To buy MMT, you can use cryptos like Bitcoin and USDT.
ArCoin
ArCoin, issued by the Arca US Treasury Fund, offers a blend of cryptocurrencies and traditional finance (TradFi), representing a share in the Arca US Treasury Fund.
Buying ArCoin gives the investor exposure to a relatively stable, low-volatility portfolio of US Treasury securities.
ArCoin is a unique option in our list because it is tied to something as steady as US Treasury bonds despite being built on blockchain technology.
If you want to diversify into the world of digital assets without the extreme volatility associated with the cryptocurrency market, try ArCoin. The market value of ArCoin only fluctuates based on the fund’s net asset value (NAV), but this fluctuation is relatively low considering the nature of the US Treasuries.
Another exciting thing about ArCoin is that holders can benefit from monthly offers from the Arca US Treasury Fund to repurchase a portion of their shares, usually between 5 and 25 percent.
RealT (RealTokens)
The last STO on our list is RealT. This is the best security token for those looking to invest in real estate but have little capital or want to avoid experiencing the usual hassle or traditional barriers.
RealT gives you fractional shares of real estate. So, you don’t need to have a huge amount of money to invest in the property market.
With RealT, you can easily and legally buy into the US real estate market through fully compliant, fractional, tokenized ownership powered by the permissionless Ethereum blockchain technology.
When you invest in RealT, you have access to low-maintenance property ownership, steady passive cash flows on the property, such as rental income, and frictionless ownership transactions through RealTokens.
What more? RealT gives you a level of liquidity as you can decide to trade your RealTokens on secondary markets.
Conclusion
Just as you have seen above, security tokens are reshaping the investment landscape and creating a fundamental shift in how investments are made, allowing for fractional ownership and increased liquidity.
In general, STOs have made it possible for investors to gain exposure to blockchain assets in a fully-regulated environment. However, it is not yet available to retail investors in the US.
Also, STOs are just a very small fraction of the overall cryptocurrency market, with just $15.5B total market cap. This is the major drawback to consider before investing in STOs, as it can lead to a major liquidity issue.
Notwithstanding, the future of finance is undoubtedly intertwined with security tokens.
Frequently Asked Questions (FAQs)
What are security tokens?
These are a subset of digital currencies and offer the holder a share in an underlying real-world asset, often tied to a project or investment, such as commodities, real estate property, bonds, and stocks stored on the blockchain. Security tokens are often backed by tangible assets and operate in a regulated environment.
What are examples of STOs?
Currently, there are lots of STOs in the market. A few of them that are worth investing in include Enegra Group Token (EGX), BMN, Meta Music Token ($MMT), ArCoin, RealT (RealTokens), and INX (the first SEC-registered security token).
Where can I get the best STOs?
You can get the best STOs from the Security Token Market. Also, some crypto exchanges, including Binance, Bybit, and Kraken, have begun to list security tokens. You can also get the best STOs directly from the providers’ website.
