What is security Token?

Just like we discussed that tokens are usually seen from companies who decide to give its investors digital tokens during her ICO, security token also in same line are digital assets which value are gotten from the existence of other tradable assets. Security token are one of a special kind of token which help to place some kind of guaranteed attention with reduced risk/loss of an already existing assets, deriving it’s premium value from this assets just like in our real estate, cars, stock/shares or even a house so as to continue to drive ownership status at any point in time. This kind of tokens too can also be seen to thrive in other areas like in paintings, artworks where they are digitally tokenize, and hence placing value of fractional ownership to the original creator.

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This kind of token continue to place ambiguity on these assets due to the underlying potentials and resultant effect of its value back to the token which continues to place premium on all sides. Security tokens are seen as investment tokens where profits made from the company in which token is digitally created are paid some form of dividend to the original token owner. This invariably makes them to not only control the company in which token is domicile but also have paramount decision making and probably have a voting system which guarantees their opinions to be considered in issues concerned.

What has security token done over the couple of years was to reduce management cost and increase efficiency in the way handling all operational related activity which is basically one of the unique of a decentralized blockchain feature.

What is a Utility Token?

Before knowing what a utility token is, we must understand what a token is. A token is a unit of value that is assigned by an organization for the purpose of creating an exchange model within the same investment community. At the same time, it facilitates the distribution and distribution of profits among all its investors. For example, the chips that are used in casinos. These chips do not have any value outside the walls of the casino, their value is representative within the same casion.

Now that we are more clear about what a token means, we can talk about what a Utility Token is.*

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Utility Token

Utility tokens are characterized because in theory they are not created as investments, that is, they represent future access to the services proposed by a company on a platform that is still under development. As long as they are fully incorporated, they could be free from the laws that apply to valuable assets in each country. The purpose of this token is not to generate expectations of obtaining economic benefits. It is constituted to provide a specific use on a platform or application, which allows the use of some services, without giving shares in the company or in its profits.

Example

There are some very successful utility tokens. Civic has created millions of utility tokens that allow access to services linked to identity control in a decentralized community based on token, an identity verification currency. These tokens represent a unit of account for the network, that is, the more the network expands and the transaction volumes within it, the more use the token will have and create more demand.

What is Equity Token? Explain an example.

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Equity token is a stock given by any new organization or business venture in which companies or individual investors are offered part ownership of the blockchain and rights to vote over the same blockchain. These tokens however, offer a form of security to investors as they are included in the expansion, increase or development of the Blockchain network and rewards are given out with regards to its performance in the market and considering the fact that these tokens are freely substitutable.

Example of Equity Token

Neufund is an example of Equity Token. It is totally a new way of generating capital. Its Equity Token Offering (ETO) consist of diverse hybridized component investment model bringing together the merits of an Initial Public Offering (IPO) which is an Initial coin offering (ICO), and a Venture Capital (VC), that allows any kind of company to officially send equity tokens on a blockchain. Besides raising funds on the platform, It also permits anyone to invest in companies collectively and receive as reward, the benefits of an effective or successful ventures, through it’s NEU token.

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