Crypto Academy Season 2: Week 2 – Tokens – by @pelon53

Hi everyone, In this homework week 2 task post, I will be answering this week’s task on writing about the different types of tokens, a task by @pelon53 - I will be giving my opinion and writing about security tokens, utility tokens and equity tokens. When it comes to investing in any cryptocurrency asset, it is very important to fully understand the different types of tokens and what they are all about, so as to make the best decision when investing in any cryptocurrency asset.

What are Security Tokens?

When it comes to the world of cryptocurrency and ICOs, security tokens are one of the 3 main types of tokens that is popular. A security tokens is simply a token that runs on a blockchain and represents an investment contract. Simply put, a security token is a token that represents a stake in an underlying asset and is recorded on the blockchain.

Anyone who invests in security tokens doesn’t have any ownership in that underlying asset which the security token represents. However, anyone who invests in security tokens has a percentage of the profits that comes from market appreciation of that underlying assets.

The value of the security token is derived from how well the underlying asset performs. Which means that if the underlying asset is successful, the security token that represents that underlying asset will gain value. Anyone who invests in security tokens expects to reap dividends or gain profits from market appreciation of the underlying assets.

Benefits of Security Tokens?

Security tokens like every other types of tokens in cryptocurrency has its benefits. Some of the benefits of security tokes are;

• Since security tokens are cryptocurrencies that run on the blockchain which means that there is no downtimes, everything is handled on the blockchain automatically.

• Security tokens greatly reduces manipulation by financial institutions, because running on the blockchain reduces the need for intermediaries which can lead to manipulation.

• Security tokens is less risky because of the legally required information that would be provided to investors by any entity, establishment or company that issues security tokens.

• The internet is there for anyone to have access to anywhere in the world, this makes it possible for anyone to invest in security tokens from all around the world.

• Transparency is another main benefits of security tokens. The blockchain is a public ledger which means that information stored on the blockchain can be viewed by anyone.

• Because of the automation that happens on the blockchain, it greatly increases the speed and efficiency of settlements.

• Because everything is done via the internet and on the blockchain, it means that trading security tokens can be done at any time, 24/7 trading.

• Increased efficiency is another benefit of security tokens because using blockchain technology and smart contracts would greatly increase efficiency.

Source

Example – Habor

An example of a platform that is all about security tokens is Habor. Habor focuses on powering the future of security tokens. The habor platform streamlines and improves the investment experience by automating the manual process, secondary transfers and investor management. One of the main aims of habor is to create a decentralized protocol that is compliant, to streamline the issuance and trading of security tokens on the blockchain.

Features of Habor

• Compliant
• Security token stack
• Interoperability
• Partnerships
• R-Token
• Exchanges
• Protocol
• Blockchain

Habour: R-Token

The R-Token is the token of habor platform. R-Token is an ERC-20 token on the ethereum blockchain, which supports habor’s compliant protocol. R-Token ensures that security tokens can only be traded on exchanges that are licensed properly.

What are Utility Tokens?

Another type of token that is very popular especially when it comes to Initial Coin Offerings ICOs. Utility tokens are also cryptocurrency tokens that run on the blockchain. They differ from the other type of tokens because their main purpose is for utility and use cases.

The main purpose of utility tokens is to have utility within an ecosystem. In other words, utility tokens have utility in an ecosystem and give individuals who hold these utility tokens access to services and payments within a blockchain ecosystem. Utility tokens allows holders to make payments, have access to services, pay for fees and more within an ecosystem.

Benefits of Utility Tokens

Utility tokens like every other types of tokens in cryptocurrency has its benefits. Some of the benefits of utility tokes are;

• Real use cases
• Serves as discount token on the Binance
• Run on the blockchain
• In some ecosystem, utility tokens can be used to lower transaction fees
• Some services in an ecosystem can be purchased with only utility tokens

Source

Example – Binance Coin BNB

An example of a platform that has its own utility token is Binance. Binance is an ecosystem in the world of blockchain and cryptocurrency. They are without a doubt one of the biggest ecosystem with clearly one of the biggest exchanges in crypto.

BNB is a well-established and very popular cryptocurrency that is among the top cryptocurrencies based on marketcap. BNB is the utility token of Binance ecosystem. Binance has a large ecosystem with different aspects. One of the biggest aspects of the Binance ecosystem is the Binance blockchain and the Binance Coin BNB.

Some Key Benefits of BNB

BNB is one of the most popular utility tokens out there and since it is the utility token of Binance, it has a lot of use cases and is used across all the Binance ecosystem. Payment of transaction fees is one of the use cases of BNB on the Binance ecosystem. Also, BNB can be used to purchase various services on Binance.

BNB Statistics, Exchanges and Wallet

BNB has a marketcap of $79,942,703,925, fully diluted marketcap of $88,851,797,153, 24hr volume of $7,549,480,316, circulating supply of 153,432,897 BNB and a max supply of 170,532,785 BNB. BNB can be bought and traded mainly on the Binance exchange.

However, other exchanges like, FTX, Kucoin, Poloniex and Gate.io supports BNB. For BNB wallet, any wallet that supports the Binance Smart Chain can hold BNB. Wallets like Trust wallet (mobile wallet), Atomic wallet (mobile and desktop wallet) are great and secure wallets to store BNB.

What are Equity Tokens?

Another type of token that is very popular especially when it comes to cryptocurrency tokens is equity tokens. Between the 3 different types of tokens, equity tokens are quite similar to security tokens but are different in their own way.

Equity tokens represents ownership of the underlying assets which the equity tokens represents. Anyone who invests in an equity token has ownership in the underlying asset which the equity token represents. The percentage of ownership depends on the amount of tokens owned.

Benefits of Equity Tokens

• Represents ownership of an asset
• They run and operate on the blockchain
• Can be issued through public placement
• Secures investors rights
• These tokens are managed by a regulatory body

Source

Example – RRT Token

An example of an equity token is the RRT Token by Bitfinex. RRT Token is an equity token on the blockchain created to compensate the people that were victims of the security breach that affect Bitfinex. Anyone who owns the RRT Token owns a percentage share of the underlying asset. RRT Token are digital token or equity token on the blockchain that serves as ownership of a percentage of the underlying asset which the equity token represents. The percentage of ownership depends on the amount of RRT Tokens tokens owned.

RRT Token Statistics, Exchanges

RRT Token has a current price of $0.054376 and can be traded on the Bitfinex exchange.