Last year was dramatic for blockchain. Many companies and industries became enthusiastic about applying the technology. And the exchange of tokens is regarded as a major evolution that could overturn the corporate system. But a lot of bubbles burst as well. Regulation was strengthened， investors retreated， and the value of digital coins plummeted. We should reflect on what the blockchain technology brought and what to expect for it in 2019.

　　After visiting Wall Street and Silicon Valley to discuss blockchain trends with many professionals， we believe that the security token offering （STO） will be the major application of blockchain in 2019. STO is the concept of financing through securitization of tokens. An equity security refers to ownership of assets such as stock shares， real estate， funds and works of art. Securities usually offer various kinds of financial rights including sharing profits， stock shares， stock dividend， right to vote， right for redemption，and so on. Tokens are certificates for such rights. Equity securities must be recorded in a certain form. Certificates have now been transformed from paper to digital form， rendering obsolete the account books of traditional exchange brokers. The technology seems to be headed to a higher-level digital form like encrypted digital books based on the blockchain technology.
　　The total value of global stock shares is about US$70 trillion， debt over US$100 trillion， and real estate around US$230 trillion. The tokenization or encryption of global assets presents a huge opportunity. This is an untapped realm wherein blockchain and tokens can empower the real economy.
　　Asset securitization is traditionally a slow process during which detailed auditing of the asset pool and agreements is required. Despite information asymmetry， input from all parties is needed. Preparation for the whole transaction can last from six months to as long as a year. And the cost of the transaction can be very high， which dampens enthusiasm for organizing. Meanwhile， a lack of transparency during the process of asset securitization influences the accuracy of risk evaluation and generates loopholes for fraud such as multiple mortgages on a single asset or leveraging assets that do not exist. Weak control of the asset pool can trigger bond defaults. And bad auditing and ratings aggravate the situation. We saw the consequences with the American subprime mortgage crisis in 2007 and subsequent global financial crisis of 2008. Although regulators around the world tightened control and transparency has increased， ultimately the change has led to a more complicated process of securitization. 　　Security tokens will make asset offering smarter. Generally， the process of making an initial public offering （IPO） includes company restructuring and establishment of a joint stock company， due diligence and counseling， financial auditing， preparation of legal opinion， pricing and issuing， and other measures. With the development of blockchain technology and smart contracts， the process could be streamlined and far more economical if smart technology is employed， thus cutting the costs of IPO， clearing， settlement and management of a listed company. For example， some processes of financial auditing can be deployed on a blockchain through a smart contract. Reports can be generated automatically onto the smart contract from uploaded data which were previously not on the blockchain. This enables investors to check the authentic financial status of the company in real time.
　　Moreover， security tokens are easier to regulate and conducive to faster flow of capital around the world. It can help improve assets and facilitate access to capital worldwide. Security tokens can also go public for a considerably lower price.
　　Today， there are over 20，000 distributors waiting for STO. When will the hero of the digital financial market arrive？ Let’s wait and see.