Crypto Academy Week 10 - Homework Post for @pelon53|| Exploring Types of Tokens

Thank you @pelon53, for your lecture on tokens part 1. Congratulations on your appointment as crypto professor.

On the homework this week, I will be writing on security tokens, utility tokens and equity tokens. Please join me as we explore.

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Introduction to tokens

The word token refers to a unit of value which exist in a digital form and built on a block chain. It is issued and stored in a block chain by a private entity.

Real money value can be tokenized, a process which involves the change of fiat money to a token. The value of a particular token depends on a lot of factors, ranging from use case, utility, security, equity, among others.

Today, we will be looking at three types of tokens: Security tokens, Utility tokens and Equity tokens.

Security Tokens
Security tokens can be defined as a digital asset that derives its value from a tradeable external asset. The tokenomics behind security tokens are governed by government regulatory laws, which varies from country to country. In other for the security tokens to thrive, it must comply with the regulatory laws. Thus, failure on the part of compliance will result in consequences which may lead to derailment of the entire project.

Security tokens depicts the real physical earnings, underlying, entitlements and company’s dividends. In economics, this is can be seen as bonds, derivatives or equities. When the regulatory requirements are made, security tokens offers a wide array of supported applications.

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Example of security tokens are Sia funds, Blockchain capital (Bcap), among others.

Utility Tokens

In a closed blockchain ecosystem, Utility tokens refers to a token which represent the right to a pre-determined function. It could be illustrated as a ticket to a concert. That is to say that the use case is limited to a particular project, thus the name utility, it is utilized for the particular purpose for which it was created. Examples of utility tokens are Funfair, basic attention token (BAT), Brickblock, Timicoin, Golem, among others.

Equity Tokens
When companies or new projects wants to offer investors some right to voting or decision making for the project, they offer equity tokens. Thus, equity tokens are digital assets that offers holders a partly ownership to the project involved.

Equity tokens offers investors a sense of security as they partake in the decision making for the block chain on which the token is built. Rewards are paid to investors in equity token, based on the performance of the token in the market.

Example of equity tokens are; Slice, .Document., BFToken., The dao., RRT Token., among others.

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Conclusion

Every token is developed to serve a purpose, as pre-determined by the developer and the company. The use case of the token is very paramount, as it determines the viability and value of the token.

Thank you for reading.

Cc:
@pelon53
@steemitblog
@steemcurator01
@steemcurator02