{"id":373,"date":"2019-04-04T16:00:00","date_gmt":"2019-04-04T14:00:00","guid":{"rendered":"https:\/\/www.bitbond.com\/?p=373"},"modified":"2022-09-30T12:56:39","modified_gmt":"2022-09-30T10:56:39","slug":"bitbond-sto-the-benefits-of-bonds","status":"publish","type":"post","link":"https:\/\/www.bitbond.com\/resources\/bitbond-sto-the-benefits-of-bonds\/","title":{"rendered":"Bitbond STO: The Benefits Of Investing In Bonds"},"content":{"rendered":"
If you are reading this you are probably aware that Bitbond Finance is currently running Germany\u2019s first\u00a0Security Token Offering<\/a>!<\/p>\n\n\n\n If you don’t know what the Bitbond STO then check out this\u00a0art<\/a>icle<\/a>!<\/p>\n\n\n\n *Financial Terminology breakdown below<\/strong><\/p>\n\n\n\n It means you and any member of the public, except Canadian and US citizens (sorry guys) can invest in Bitbond via the Bitbond token (BB1).<\/p>\n\n\n\n A quick summary of Bitbond:<\/p>\n\n\n\n Now we have given you a quick summary of Bitbond’s business model, let us break down what the Bitbond token is and more importantly what returns you stand to make!<\/p>\n\n\n\n First, it is important to clarify the Bitbond token (BB1) is not a currency or coin, like Bitcoin or Ether, but rather a financial instrument comparable to a bond.<\/p>\n\n\n\n Essentially BB1 is a bond issued and serviced on the blockchain, hence a tokenized bond.<\/p>\n\n\n\n A bond is a traditional financial instrument that represents a debt obligation and thus works as a form of borrowing.<\/p>\n\n\n\n In terms of the Bitbond token, the investor buys a bond (debt obligation), meaning they own the obligation and right for Bitbond to pay them back after the bond matures. During the period to maturity, bondholders receive interest ( a so-called coupon*) on their investment.<\/p>\n\n\n\n BB1 token holders receive five payments per year, broken down like this:<\/p>\n\n\n\n The proceeds from the BB1 token offering will be invested into loans of business owners. This is a fast-growing market that is under-served by banks. Bonds provide a so-called fixed income. While this is true of other investment options, bonds offer more stable cash streams. In regards to the Bitbond token, investors will receive quarterly payments (coupons*) as well as one annual payout. This is a steady income flow that can be counted on and planned around year on year.<\/p>\n\n\n\n Bonds also provide diversification. As an investor, you don\u2019t want to \u2018put all your eggs in one basket\u2019, as cliche, as this saying is the principle, stands true. You reduce investment risk factors by having a diverse investment portfolio. Market volatility is a fear for every investor and bonds help subside this fear and help to preserve capital. Which can be key for equity investors when a stock market is falling.<\/p>\n\n\n\n With the Bitbond token, you also get double the portfolio diversification! As the funds raised from the Bitbond token are being re-invested into Bitbond\u2019s SME lending platform. So everybody who invests in the BB1 token has an exposure to a highly diversified portfolio of small business loans as well!<\/p>\n\n\n\n The final and one of the biggest perks of investing in a bond is the Yield to Maturity!<\/p>\n\n\n\n Yield to maturity is the total anticipated return on a bond if it is held to its maturity*. So in regards to the Bitbond token, it is the anticipated returns if an investor held BB1 until the end of the 10 year maturity* period.<\/p>\n\n\n\n In regards to the Bitbond STO\u2019s yield to maturity, the graph below is the estimated profit for an investment of \u20ac10,000 at \u20ac0.90.<\/p>\n\n\n\nBut what does this mean for you?<\/h2>\n\n\n\n
What is a Bond?<\/h1>\n\n\n\n
The total return to BB1 token holders depends on the performance of the underlying portfolio of loans. A realistic scenario is that the total amount of interest will be 8% per year. For further details, check out our EU complaint securities prospectus*.
The BB1 token has a maturity* of 10 years, which means Bitbond Finance buys back the BB1 token after 10 years at its face value of \u20ac1 \u2013 regardless of whether the investor received a discount<\/p>\n\n\n\nWhat are the benefits of investing in a bond?<\/h2>\n\n\n\n
What is Yield to Maturity?<\/h2>\n\n\n\n