Though referred to as new, cryptocurrencies have been on the market since 2009. Today collectively, the worth of cryptocurrencies is more than $1 trillion.
However, 2022 was a rough year for all cryptocurrencies, but 2023 appears to be a good year for crypto advocates. Quite surprisingly, Bitcoin has topped $30,000, and Ether has neared $2,000 this year. Towards the end of 2023, experts predict that Bitcoin could skyrocket to $100,000. Quite unbelievable, isn’t it?
While purchasing cryptocurrency is wise, you cannot leave it up for grabs. Tokenizing cryptocurrency has been a game-changer for investors. Converting cryptos into digital tokens makes them indecipherable and protects them from hackers.
However, for a long time, blockchains like Ethereum have struggled to assure compliance to investors due to their general-purpose design.
But Polymesh has tackled the issue and is set to bring technology to the traditional finance world. This permissioned blockchain designed specifically for regulated assets by Polymath endeavors to provide a prototype network that meets the needs of the industry for compliance, identity, confidentiality, governance, and settlement.
With Polymesh Network’s POLYX token, you can create, manage and trade security tokens without knowing the ins and outs of blockchain. Here’s a comprehensive guide on how Polymesh Network’s POLYX Token offers a secure and compliant marketplace for trading cryptos.
The Security Token Landscape: Challenges of Compliance and Security
Even with its merits, blockchain’s decentralized nature poses many obstacles regarding regulation and compliance.
The landscape of compliance requirements is dynamic. Besides adding complexity, this necessitates using proprietary technology with automated elements. As such, manual intervention continues to be a significant aspect of compliance systems.
Proprietary software established atop a general-purpose blockchain automates key steps. But as users layer subsequent rules, the chain’s computational capacity is stretched due to the amount and intricacies. As a result, adopting evolving compliance regulations gets difficult.
On the other hand, financial markets place a premium on privacy and security. Contrary to everyone’s expectations, anyone can see the ownership of every public address on most public blockchains. Does that mean token holders have no complete anonymity? Absolutely, yes! In fact, your holdings can be uncovered- sounds scary, right?
Employing layer-2 protocols claims to protect funds, but do they live up to their word? While layer-2 protocols don’t compromise on security, you won’t be able to meet compliance and ownership reporting requirements.
Unfortunately, compliance is the price you’d have to pay for confidentiality.
Exploring the Polymesh Network’s Solution: How POLYX Token Ensures Secure and Compliant Trading by Addressing the Issues of Compliance and Security?
General-purpose blockchains use smart contracts or digital contracts for issuing security tokens. Conversely, Polymath’s purpose-built blockchain network, Polymesh’s POLYX Token, works to alleviate these performance issues and the scalability of blockchains. Let’s discuss how Polymesh Network allows for compliant and secure trading.
Polymesh solves compliance issues with thorough automation, allowing quick processing and reduced protocol costs. POLYX Token of Polymesh guarantees compliance in the following ways:
1. It Allows You to Set Rules and Tailor Them
With flexible and protractible rules, you can automate rule enforcement without the need for semi-manual or manual approval for individual transfers. Ultimately, this reduces costs in the long run.
Depending on the type of asset, regulatory regime, and jurisdiction, you can tailor and combine rules.
2. It Repels Attacks and Allows Issuers to Handle Multiple Accounts With its Unique Identity System
What’s the secret to Polymesh’s successful deployment of on-chain compliance? Surprisingly, the Polymesh Unique Identity System (PUIS), designed to repel the so-called “Sybil attack,” has made on-chain compliance possible.
A prime instance of a Sybil attack could be an entity amassing a substantial stake in the asset by using multiple Polymesh accounts and avoiding reporting.
Then, is it that you can operate only a single Polymesh account? No. You can operate multiple accounts thanks to Polymesh’s mechanism of self-linking.
As far as security is concerned, Polymesh Network’s POLYX Token doesn’t fall short either. Here’s how Polymesh Network ensures secure trading of cryptocurrencies:
1. Data Confidential is its Priority
Every token that you keep and transfer is encrypted by Polymesh. Another way to keep your tokens confidential is through Polymesh’s zero-knowledge proofs.
Through confidential transactions, you can configure the security token as confidential. And the best part? You can grant trusted parties audit rights to view transaction details without compromising those transactions’ privacy or revealing other secrets such as asset spending or cryptographic private keys.
2. Managing Assets is Easy With MERCAT
Noteworthily, on Polymesh, you can cap table updates and automate compliance checks while still keeping and transferring cryptocurrencies confidentially. Wondering how? The Mediated, Encrypted, SeCure Asset Transfers (MERCAT), a patent-pending protocol, makes it possible.
MERCAT, a new protocol, uses a hybrid design approach to manage assets in an auditable and confidential way by combining zero-knowledge proofs with constraints implemented by trusted mediators.
During configuration, Polymesh allows issuers to keep their security token transactions confidential to enhance security further.
Polymesh Network’s POLYX Token: The New Paradigm for Secure and Compliant Trading
Unbelievably, investors have lost more than $3 billion of investments to crypto hackers in 2022. That’s why it’s considered the year with the most digital-asset heists.
You can understand how important it is to find a blockchain that opens the door to new financial instruments while solving privacy problems.
Fortunately, with POLYX Token, Polymesh has successfully established an institutional-grade permissioned blockchain that addresses compliance and security issues in issuing and trading security tokens.
In line with Polymesh, Polymath has left no stone unturned to achieve higher levels of centralization while emphasizing confidentiality more than Ethereum can. With several unique features like a compliance engine and identity model, no wonder Polymesh Network’s POLYX Token has become a worthy marketplace for holding and trading cryptocurrencies.