Chinese Investors Are Using Security Tokens As A New Investment Vehicle

With trillions of dollars at risk, China’s middle class is looking for alternative investment vehicles to invest in where money can be transferred safely and securely to and from the country. This is where blockchain technology and security tokens have come into the equation. Chinese investors are starting to realize the potential of this technology and all that it encompasses.

Here’s more on what the technology has to offer, how it works, and the benefits of using it for real estate investing.

What is Blockchain Technology?

Blockchain technology refers to the storage of transactional data (i.e. date, time, dollar amount) on a decentralized digital ledger. Decentralization creates a trust network because there is no single entity controlling the ledger. Transactions are verified by a community of miners. Miners are computers dedicated to the network to validate all transactions and prohibit any bad actors. Validated transactions are then stored into a block on a decentralized network and sealed with a lock called, a hash that can never be changed.

In the real estate industry, the opportunity to purchase security tokens using blockchain technology has come up in recent times. With security tokens, investors gain access to SEC-approved tokens, which are verifiable and can be used to move money. For real estate investors, security tokens represent digital shares of stock in a company and can also be used to purchase assets within that company’s ecosystem. For example, an investor can purchase security tokens to invest in a new condo development, and then use those tokens to purchase a condo in that development if the particular investor chooses to do so.

Another feature of security tokens which makes the technology superior to the old real estate investment model is being able to liquidate the tokens at any time. Over the years, real estate investing has proven to be one of the safest vehicles for investors because of the tangible assets it holds. However, investors are can only liquidate their ownership shares when the owning entity decides to do so. The use of security tokens allows each owner to liquidate their ownership shares individually at any time.

It’s a new-age technology that is gaining traction among investors all over the world. Many investors, including institutional investors believe security tokens will be the investment vehicle that will make way for mass adoption of Blockchain technology.

Benefits of Using Blockchain Technology

1) Immediate Transfers

It starts with something as simple as the immediate completion of large transfers. With financial institutions, a considerable amount of effort and time is spent on pushing the transaction through and this can add up over the course of a year. As a result, Chinese investors like the idea of using blockchain technology to keep things moving along at a good pace.

2) Easy to Verify

It is a comprehensive digital ledger and is easy to monitor for transactional oddities. Blockchain was developed to be a trust network and one of the main reasons this technology came to fruition in the first place. It was deemed to be an authentic way to verify transactions and a new way to track how digital currencies can be transferred between parties.

3) Security Tokens

Chinese investors can use security tokens to not only buy shares of stock in companies they like but use those tokens to purchase assets within the company’s ecosystem. Despite more regulations being placed on security tokens, investors are more secure with the oversite of the SEC protecting them from bad actors and nefarious investment schemes. It’s the best way to feel safe as an investor and that’s always important.

4) Elimination of Fees

For those looking to invest in North America, it becomes important to use blockchain technology as it eliminates potential hurdles imposed in China. Imagine all of the hidden fees investors have to deal with while moving large amounts of money out of the country. These fees add up and become a major expense! Blockchain technology and security tokens help get rid of these fees before they become impossible to handle.

Final Thoughts

Chinese investors are pouring a tremendous amount of financial capital into their real estate investments in recent years. However, the challenge of moving large amounts back and forth continues to dissuade them. As a result, blockchain technology, with the use of security tokens has changed things for the better and is a welcome addition to the world of investing.

As more and more Chinese investors start to look at the merits of blockchain technology using security tokens, they’ll realize this investment vehicle is the best way to transfer large amounts of money safely, and securely in and out of the country.

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