EMURGO Blockchain Primer: The Potential Benefits & Challenges of STOs to Accelerate Blockchain Adoption

A Blockchain-Based Future

Imagine waking up and checking your smartphone after a sip of your morning coffee. The equity for your promising startup has been sold to investors from all over the globe – Canada, Malaysia, Estonia, Niger and the list goes on. You can now take your company to the next level as it has raised valuable seed capital with a blockchain-based version of a Series A. You are one of a countless number of other talented global entrepreneurs & visionaries - all funding and growing their businesses through security token offerings (STOs) while all types of other assets are also being tokenized. This is the vision for a modern and digital-friendly business landscape underpinned by security tokens and the tokenization of assets.

STOs Show Tremendous Potential for Growth

As of today, security tokens and tokenization of assets are still in their nascency. Nevertheless, the future potential for digital tokenization is largely untapped and its growth can become exponential according to the size of the addressable markets. Awareness of STOs and implementation of blockchain technology is increasing gradually and in some places, very rapidly.

Currently, the total market capitalization for digital assets stands at approximately $270 million. [1] The entire market capitalization of the world’s equity/stock markets stands at nearly $70 trillion with the world’s total physical supply of money (coins, notes, checking, savings) at $37 trillion. Thus, there is an enormous potential for growth in tokenization of the world’s equity markets and supply of money.

Security tokens and blockchain-based tokenization due to its programmable compliance, divisibility, and subsequent increased liquidity, carry enough revolutionary potential for enterprises to have already started building platforms and thinking of ways to prepare for STOs. Governments have started to learn about how blockchain can affect traditional industries via security tokens. So then what is the reason for the sluggish adoption of security tokens and tokenization?

How to Overcome Regulatory Uncertainty & Raise Blockchain Awareness

Just like Rome, the STO markets and accompanying underlying infrastructure won’t be built in a day – or even a year. The negative connotations of the ICO (initial coin offering) boom and bust still haunt the STO markets and investor perceptions tend to change slowly.

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