Crypto startup Polymath aims to revolutionize the security token. For those who are not aware security tokens have similar properties as financial securities. Equities, bonds, venture capital and global currency live on outdated platforms that were designed in the analog era.
In general, we can identify two types of tokens.
- The app token which is essentially a digital coin. It is used to transfer value or gain access to decentralized networks.
- The security tokens which is a digital coin that represents shares in traditional financial assets.
Ethereum revolutionized the app token. It has become the go-to platform which enables all sorts of blockchain applications for app tokens. They are basically conduits for blockchain applications to function. Think of almost any ICO in 2017; they almost all live and function on the Ethereum blockchain.
Ethereum was the revolution of 2017.
Polymath wants to trigger the next revolution. It wants to achieve in the securities space (bonds, equities, etc) what Ethereum did with app tokens
Polymath is betting that security tokens will dominate the blockchain universe.
The app token market is $100 billion in 2017. Polymer predicts an app token market cap of $500 billion by 2027.
The infrastructure to enable trillions of dollars of securities to migrate to the blockchain is not yet built.
This comparative table provides a great overview. It compares Ethereum with Polymath.
The first item on this table makes the point that the securties market is much, much bigger than the appcoin market because there are so many securities out there. The flipside of this story is that companies, organizations and institutions should be willing to bring their securities to the Polymath blockchain. This is one of the key success factors to closely monitor in order to understand how big Polymath could become.
The second item is more or less a confirmed success factor: because of its easy of use Polymath should be able to attract many more followers and users than Ethereum.
One of the great benefits of Polymatch (read: problems they are solving) is that the platform doesn’t require tech knowledge. It guides users through every step from creation, to fundraising, to secondary-market trading while complying with ever stricter regulations.
According to Bloomberg:
A tiny fraction of the approximately $160 billion cryptocurrency market are securities tokens (only $50 million according to Polymath). Unlike application tokens, securities tokens represent a stake in a company or fund and directly benefit from earnings or capital appreciation, much like shares do.
The Polymath platform has launched officially on October 1, and hopes to enable financial companies to launch their own asset-based securities easily and inexpensively.