Bitcoin (BTC) and other cryptocurrencies have likely been popular topics at your office water cooler or the local bar over the past year.

But mainstream discussion and mainstream adoption are two different things. A study conducted in February found that fewer than 8 percent of Americans owned cryptocurrencies. Meanwhile, institutional investors have largely stayed on the sidelines, in part because of regulatory concerns. And  using crypto to buy goods and services? Research that Chainanalysis conducted for Bloomberg reveals bitcoin’s use in payments has been on the decline.

“I’ve always viewed security tokens as a big tent that brings in a lot of traditional investors,” says McKeon. These are “assets institutional investors already understand.”  

For Stephen McKeon, a University of Oregon finance professor and cryptocurrency expert, it’s not a question of whether cryptocurrency and digital tokens will go mainstream but when, and by what means. He says security tokens are likely to become popular investments, while the use of cryptocurrencies for payments will depend on an ecosystem of digital wallets.

“I’ve always viewed security tokens as a big tent that brings in a lot of traditional investors,” McKeon tells ThirtyK. These are “assets institutional investors already understand.”  

In addition to being an academic, McKeon is also chief strategic officer at the Security Token Academy, which aims to educate the world about security tokens and security token offerings.

McKeon was introduced to cryptocurrencies in 2013, a few years before bitcoin would command the headlines on the nightly news and the conversations at cocktail parties. Back then he was focused on Skyward, a commercial drone software company he co-founded and sold to Verizon in February 2017, before the age of ICOs. McKeon says the focus then was understanding what causes cryptocurrency to gain in value.

The professor’s interest shifted in April 2017 when Blockchain Capital sold digital tokens to raise money for a new investment fund. McKeon became interested in tokenized securities, or tokens that are backed by real assets.

“I was thinking about securities as an academic for a decade, and watching Blockchain Capital tokenize a portion of a fund started me thinking it can expand to other asset classes such as real estate, bonds, and insurance,” he says.

Tokens Tied to Real Assets

A big knock on cryptocurrencies and one reason institutional investors and accredited investors have been shying away from the marketplace is they are hard to value because they aren’t tied to an asset. Security tokens are different. They are backed by something tangible, be it a piece of real estate, a portion of a company, an investment in a fund or a bond.

An example is the World Bank’s bond-i offering, named for Australia’s famed Bondi Beach. The international financial institution tapped the Commonwealth Bank of Australia to arrange what the World Bank describes as the first bond to be created, allocated and managed using blockchain. The money raised will go toward sustainable development initiatives.

Because security tokens can be valued, they are easier for investors to understand making them a more attractive option, says McKeon. “People have been investing in real estate for thousands of years. They understand how value accrues. We think many institutions will enter the space once they get comfortable.”

Making Digital Wallets Common as Email

When it comes to cryptocurrency that is used as currency, McKeon says an ecosystem of wallets has to be built out for mass adoption to occur. Many people have heard horror stories about losing bitcoin to hackers or digital wallet companies disappearing. McKeon likens this to the early days of the internet when people balked at sending an email or visiting a website because of the fear of computer viruses.

“Something like email that today seems so everyday and mundane was sort of scary at first,” he says. The same thing [with] crypto. Someday everyone will have a digital wallet just like everyone has an email address. The adoption curve will take some time.”

Donna Fuscaldo
Donna Fuscaldo has been a journalist for more than 15 years and writes about such topics as stocks and cryptocurrency for, Moneycrashers and Pymnts, among other publications. She is a a former Dow Jones Newswires and reporter and was a special contributor to The Wall Street Journal.