Industry experts are upbeat about the blockchain sector in the long term as it could eventually unlock the mainstream usage and create a truly open ecosystem for digital payments.
One way in which blockchain could be pushed to center stage is through security tokens — a type of token that derives its value from external, tradable assets.
Co-founder and Chief Technology Officer of TrustToken Rafael Cosman envisioned, security tokens have the potential to unlock a new realm of possibilities of transacting any form of asset, instantly, to anyone globally
Rafael Cosman — co-founder and chief technology officer of TrustToken, who built the original smart contracts for TrueUSD, his company’s first asset token — is passionate about building the new financial payment rails that will open access to assets such as currencies, commodities and real estate.
Trillions of dollars are today locked up in illiquid and inefficient assets throughout the world, but, as Cosman envisioned, security tokens have the potential to unlock a new realm of possibilities of transacting any form of asset, instantly, to anyone globally.
While the traditional international wire transfer may usually take multiple days and charges huge fees, security tokens, on the other hand, have the potential to make cross-border transactions within seconds, and get instantly converted at a very competitive rate.
They will also be able to build up a truly open ecosystem, unlike any of today’s digital money wallets, such as WeChat, Paypal and Square, each of which is a closed ecosystem, with no possibility of any transaction being made between those platforms.
What security tokens could create will be a completely open standard for digital assets, said Cosman, who believed that with so many applications plugging into one system, security tokens are capable of shattering the boundaries between digital wallets and creating a much more powerful paradigm.
For people who want to own and trade US dollars but without access today — those either without a bank account or living in places like Argentina, whose currency is inflating tremendously — security tokens offer them a great solution.
According to data from Tether, or USDT — a type of stablecoin with a value meant to mirror that of the US dollar, there are some $2 billion in demand for the US dollar-pegged token globally.
But it’s going to take 5 to 10 years before all the infrastructures are set up for the security tokens, so TrustToken is playing a really long game, according to Cosman.
While pegging tokens with real-world assets, security tokens are designed to minimize the volatility of the price, which brings it another name — stablecoin, which, according to Cosman, is a “huge piece” of the blockchain future.
This makes perfect sense because no investor would want his or her assets to fluctuate too much in value, which means stablecoins are a prerequisite for solving all the other problems in the blockchain industry, according to Trent McConaghy, founder of Ocean Protocol — a blockchain-enabled data sharing substrate.
He also believed that stablecoins would be a key building block in the emerging cryptocurrency market.
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