Cryptocurrency Security Trading Roars to Life with Polymath (POLY)

The recent explosion in initial coin offerings has shown a fairly specific trend. Most of the new coins are considered ‘application’ tokens, or currencies designed for use within an application created by the issuer. Given the genesis of blockchain technology, there’s nothing surprising about this. The first adopters of cryptocurrency were technologically minded and focused on what the new system could do. As blockchain development gained momentum and value, the financial world started to take notice. High on their list of potential uses was the creation of ‘security’ tokens. This would bring the world of company shares to the blockchain, and provide all the advantages of a decentralized, distributed ledger.

Polymath’s software development has focused on bringing this capacity directly to issuers. Their Polymath platform will allow individuals and companies to easily create a security token to serve as a digital share of their enterprise. The ST20 standard for new tokens is designed to be quick, easy and above all else, verifiable. In order to create the decentralized securities exchange that they envision, Polymath must ensure that they apply the same regulations that govern traditional securities.

The Difference Between ‘Application’ and ‘Security’ Tokens

Most savvy crypto-investors are already well aware of the difference between a coin and a token. Beyond that, there is also the difference between an ‘application’ token and a ‘security’ token. The vast majority currently available on the market are application tokens. The Ethereum ERC20 standard is still the code base of choice for these tokens, which are created to serve a purpose within the software ecosystem of the issuer. Polymath’s POLY token is, itself, an ERC20 token that uses smart contracts to help verify identity and as a common currency within the system for security exchanging.

In contrast, a security token does not serve any function on its own. Rather, it is a form of ‘digital share’, representing ownership of a portion of the issuer’s company. This can include many of the features of traditional stocks, including dividends and voting rights. The ST20 Polymath platform standard allows the creation of security tokens for internal use. The issuing entity can then sell their currency to build initial capital. Those security tokens can then be traded on the Polymath platform, using POLY as a common value currency.

“Know Your Customer” Identity Verification

One of the most critical components of the Polymath system is the strict adherence to regulations. Polymath intends to verify the identification of all users, as well as their required certifications. They will do this using the native smart contract capacity of the POLY token. This will help ensure that anyone purchasing securities on their exchange is legally able to do so. This is known as a KYC or Know Your Customer requirement, and is expected of traditional brokerages. Polymath believes that these types of regulations will eventually be enforced on the cryptocurrency market.

It also adds an additional level of revenue generation within the platform. KYC providers will serve an important purpose, running the necessary checks to ensure valid identities. Users will be able to choose from all the KYC providers on the network so that they can choose the best option for them – including price and accreditation in their country of residence. The same is true of issuers, who will use a legal delegation pool to find someone to manage their smart contract requirements. These delegates can enforce certain restrictions on the issuance of tokens – including time-locked freezes and coin burns.

Polymath as a New Type of Securities Exchange

Traditional security offerings are often expensive and time-consuming, requiring multiple layers of middlemen and legal teams. It can take years to fully realize an initial public offering. There are also multiple levels of investor, requiring different levels of accreditation to invest. This has partially been responsible for the prevention of United States citizens from participating in many ICOs. Polymath intends to create a platform where this can be done more easily, and much more quickly.

All of the same rules and regulations would be in place, particularly in regards to identity. The KYC and Legal delegate system would remove much of this burden. The ST20 token is also designed from the ground up to be simple to implement. Once the new security token is available on the Polymath platform, it can easily be traded on the secondary securities market by anyone holding POLY tokens.

Polymath’s Potential

Since POLY’s release less than a month ago, the cryptocurrency has already more than doubled in value. Their extremely low market cap of only $364 million leaves them tremendous space for growth from their current per coin price of $1.5. As they begin implementing their securities exchange platform and bringing new security tokens on board, their price should adjust accordingly. The project is ambitious, but the technology is available – it is just a matter of implementing it.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency.

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