Since the introduction of the first-ever cryptocurrency - bitcoin, the world has seen a new version of the decentralized ecosystem and various protocols powered by the latest technologies which include blockchain technology. The blockchain is a distributed ledger with a series of blocks that are tied together with a hash to provide robust security for any crypto platform. The main vision of this technology is to offer an open, borderless, neutral, and decentralized payment system. Blockchain technology gave birth to many new crypto tokens and also it changed the entire payment system.
Speaking of which, currently, security tokens have become an important factor in the crypto space. The crypto tokens which are created by pegging the real-time asset are recognized as security tokens. These tokens will represent the fractional ownership of the asset and entities. In other words, the tokens which are qualified in the Howey test are said to be security tokens. One can easily raise funds through an STO platform by developing a security token. If you are a crypto enthusiast, you might have heard about Ethereum’s ERC20 token standard which is repeatedly used for creating tokens and raising funds in ICO. but for asset tokenization, this token standard will be an issue. Because it doesn’t match with any regulations of securities.
To overcome this issue, the Ethereum community team introduced the ERC1400 token standard for creating security tokens. As we know that Etherem is the powerful blockchain in the marketplace, so many startups used this ERC1400 standard for security token development.
If you are a startup willing to create a security token using the ERC1400, then you are in the correct place. In this article, let us discuss how to develop a security token by using Ethereum’s ERC1400 token standard and other essential factors.
Let us quickly begin with…
What is the ERC1400 Token Standard?
The ERC1400 token standard was introduced by Adam Dossa, Fabian Vogelsteller, Stephane Gosselin, and Pablo Ruiz. It was specially designed for security token development and it is the latest Ethereum’s token standard. ERC1400 token standard is the combination of both the ERC20 token standard and ERC777 token standard. So that it will make sure that the security token is backed by the real-world asset. The security tokens which are developed by using the ERC1400 token standard are called ERC1400 tokens. In other words, these security tokens are created by polymaths along with many external contributors. This ERC1400 token works with many other token standards to manage the token transactions seamlessly. This token standard makes the transaction more transparent and the user can check the transaction statistics in real-time.
When you use the ERC1400 token standard for security token development, you can make the following kinds of restrictions.
- One can easily regulate the holding period in a wallet
- Whitelist potential buyers/sellers
- You can limit the number of tokens per crypto wallet
- Put a threshold on transactions
- Restrict buying/selling when KYC expired and more.
Importance of ERC1400 Token Standard
With this ERC1400 standard, the security token protocol can be adopted easily. Because issuers, investors, and developers can work within the same framework. The ERC20 token standard has caused the expansion of the utility tokens. But the ERC1400 standard could increase the expansion of the security tokens because it has an interoperability feature. If you use this token standard for security token creation, then your security tokens can be operated on all STO-relevant platforms. As per the currency crypto market, few ERC token standards fall under the ERC1400 security token standard. Such as
- ERC1594 - Core security token standard
- ERC1410 - partially fungible tokens
- ERC1643 - Document management standard
- ERC1644 - Controller operations
How to Develop a Security Token by using ERC1400?
The basic concept of deploying a fully functional security token is getting legal approval from the SEC. Besides, the security token developer must satisfy all the rules and regulations of SEC guidelines before creating the security token on the ERC1400 standard. One can create a security token in two simple ways. Firstly, if you have technical knowledge of this ERC1400 token standard and have the approval of the SEC, then you can create a security token on your own. But the risk will be very high when you develop it by yourself. So what will be the second option???
You can hire a team of skilled blockchain developers from the top-notch security token development company in the industry. Because they would guide you to launch a security token by using the ERC1400 at an affordable cost. The experts from the development firm will assist you right from ideation to deployment.
Benefits of creating ERC1400 Tokens
- It can be used for both startup companies and big organizations around the globe. So that it gives great results for transactions.
- These tokens can make a more dependable form of investment
- ERC1400 tokens will make transactions more transparent and secure.
- By using these ERC1400 tokens, the token holders will be the owner of their tokens so they can be treated as a security.
- You can attract more users easily through launching ERC1400 tokens which helps in gaining a massive amount of profits.
Wrapping up
Currently, STOs are also gaining a huge prominence in the market so many startups and entrepreneurs are launching their own STO platform by using the premium STO software. If you are looking to create a security token with reliability and security, then ERC1400 can be your primary choice. Therefore, start your crypto token business by developing an ERC1400 token and generate a great number of profits in the crypto space!