INTRODUCTION
In 2008, Satoshi Nakamoto began a new era of digital economy by creating a blockchain technology and the first cryptocurrency based on it - Bitcoin. It quickly occurred that it is developing very dynamically and has a huge potential to revolutionize our future.
Many people became fascinated by this technology and opportunities that it provides. This resulted in hundreds of thousands of magnificent projects, which use blockchain technology to disturb and improve both common problems of our lives and complex technological issues. Those are called ICOs, which stands for Initial Coin Offering.
Unfortunately, a lot of people have not understood the idea of ICO properly which resulted in many unsuccessful projects that simply aimed to improve the creator's business while not adding anything valuable to the community. Due to such approach, Ethereum price dropped considerably (as most of ICOs are based on it) and blockchain community started to ask themselves a question: are ICOs a future of blockchain?
SECURITY TOKENS
| Security tokens came up as a potential solution to these problems. Their first and the most important advantage is being based on real assets, by contrast to Utility Tokens which actually do not represent any real value and therefore are hard to properly evaluate. |  ___________________________ |
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The best example is Bitcoin which started from the price of a few cents in 2009 and currently is worth about $4,000. This happens because the price of Utility Tokens depends on many factors, such as the level of excitement about a particular project or activity in its social media. These factors are very easy to manipulate, so the price can be more or less controlled. Such conditions are unacceptable for accredited investors and results in a lack of confidence.
If it comes to security tokens, their value is determined on the basis of assets such as real estate, venture capital funds or equity and individual houses. This means that they act very similar to traditional securities. Their value will not fluctuate like in the case of Utility Tokens, because real assets are far more stable. If someone decides to tokenize his hotel, you will be able to buy a token which represents your ownership over a part of it. Its price depends only on the overall price of this particular hotel. Whereas if you own Ethereum or any other utility you actually do not own any part of the Ethereum company, you do not gain any voting rights or profit distribution.
So far, there are several platforms that offer to pass through the process of Security Token creation without any trouble, such as Polymath, Harbor, Smart Valor or Templum.
Quite exciting, right? Let's take a closer look at how to run Security Token on Polymath!
SHARE YOUR VIEW
Do you think Security Tokens have the potential to revolutionize Blockchain? Will Polymath become the second Ethereum? I would love to hear your opinion!
Ethereum & ERC20 Token Wallet
- Issuing a security token on Polymath requires performing several transactions with ETH and POLY tokens in a Kovan Test Network. Therefore, you will need MetaMask wallet that supports these features. You can download its browser extension here.
| We will issue our securiy token in the Kovan Test Network (it will provide us with a possibility of testing Polymath for free) so you need to set your wallet to it. |  (pic source: https://polymath.network/) |
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- Then, you need to get some Kovan ETH to be able to cover gas costs (transaction fee). Simply join their Gitter channel and post your Ethereum address (you can get it from MetaMask) to the main chat. After a few seconds you should receive one Kovan ETH.
- After receiving ETH go to the Kovan POLY Token on Etherscan: https://kovan.etherscan.io/address/0xb06d72a24df50d4e2cac133b320c5e7de3ef94cb. Select Write Contract then Connect with Metamask. The red icon should turn green indicating a successful connection.
- Scroll down to getTokens tab and enter the amount of POLY tokens. To receive 20,500 POLY which you will need to complete the token creation process input a 205E+20 value. Then, provide your Ethereum address.
| Click Write and the transaction window should pop-up. If nothing happened you need to manually open the MetaMask extension. Click Submit to realize transaction. |  source:https://polymath.network/ |
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| Open MetaMask, click Tokens, then Add Token. |  |
| Input the POLY contract address: 0xB06d72a24df50D4E2cAC133B320c5E7DE3ef94cB. Then, change the token symbol to K-POLY. |  |
| Now, your 20,500 POLY tokens should appear in MetaMask! |  |
TOKEN CREATION PROCESS
- Go to Polymath site: https://polymath.network and clickCreate Security Token. Firstly, provide Polymath with your details.
- After submitting your details, MetaMask notification should pop-up. Click Sign to connect Polymath with your wallet (make sure it is set to the Kovan Test Net).
- Create your account by providing your name and email.
- Enter your token symbol and name to reserve them. This operation will charge you with a payment of 250 POLY.
- Completion of the token reservation requires two wallet transaction. The first one is a transfer of 250 POLY tokens and the second one is used to pay the Kovan Test Net fee. You have to submit both transactions in MetaMask.
- Check the correctness and verify your email address.
Your Polymath dashboard is integrated with several providers to streamline your on-boarding process and access to their services. The information you enter in each associated form will be sent automatically to the firm you apply for. Upon review of your information, the firm will contact you directly to establish the applicable next steps.
Polymath provides you with companies that may help you with Advisory, Legal, KYC/AML, Marketing, and Custody Service. Obviously, you do not have to choose any providers if you have your own.
- Complete the process of configuration and create your token (this will charge you with the payment of 250 POLY).
- As previously, submit both transactions in MetaMask.
As a next step, you may now elect to mint tokens for existing shareholders, affiliates or for your reserve. Note that manual minting will no longer be available once you schedule an offering for this token.
Alternatively, you can also skip this step.
- Select an appropriate template for your token offering. Currently there is the only one available.
- Configure your offering by providing financial details and timing, then click Deploy and schedule STO. This operation will charge you with the cost of 20,000 POLY.
- Submit both transactions in MetaMask.
- As the last step, import the whitelist of Ethereum addresses which will be able to participate in your STO.
That's it! You have successfully created your first Security Token! I hope that the creation process will let you better understand the difference between ICO and STO.
Author: @neavvy