Crypto Academy Week 10 - Homework Post for [pelon53]

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I begin this homework, by saying thanks to the Steemit Crypto Academy and all the teachers!!!

That picture you see above, I put it for a reason, and is that many people see the world of crypto as something very strange, and I wanted to represent it with that image full of confusing numbers, and this is where I say it is not the easiest topic in the world, but it is a topic which we must pay attention, give it time and study it, because every day this will be incorporated more and more in our daily lives.

That's why I love this Steemit Crypto Academy, because it helps many of us to understand and deepen our understanding in these very important topics.

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Before explaining the three main token types in depth, I feel I should explain what a token is.

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A token is a unit of value that its purpose is interact with any type of products.

Mankind has been using tokens since the very beginnings of the first commercial transactions. But we know that their conceptualization as a token or currency dates back to the times of the Roman Empire. At that time, these tokens were used as payment tokens in gambling centers.

Centuries later, with the expansion of the Spanish and English empires in the New World, the need to create money to enable exchanges was quickly born. The colonizers thus created tokens that were used to be exchanged for food, provisions or legal tender. Thus tokens were a fundamental part of population settlement in the New World.

But even in current times such as the 19th and 20th century, tokens were used by private individuals to create means of exchange that they could control. However, the use of tokens declined in favor of legal tender and a more orderly economic system.

Having given an introduction to what a token is and its origin, I will now explain the three main types of tokens.

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Security Token

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A security token is one that gives the purchaser a stake in the company that issued it and can be compared to the way shares are purchased in the traditional stock market.
Anything defined as a security in the United States is regulated by the Securities and Exchange Commission (SEC), including security tokens.

To determine what a security token is, the SEC conducts a study through the "Howey Test" to determine if the token is a security token. If the token meets the following characteristics, it is considered a security: If there is an investment of money, there is an expectation of profit, the investment of money is in a common enterprise, any profit comes from the efforts of a promoter or a third party.

Some advantages:

Security tokens are digitized through blockchain, which gives them great advantages such as reduced transaction times and a transparent environment to move in. They are considered assets, which offer their owners the opportunity to earn profits based on the growth of a company. Their backing can be obtained from something tangible, such as assets, profits of a company and therefore, they are considered as investments for legal purposes.

Like the rest of tokens, these arise from an ICO, which allows companies to obtain the necessary capital by selling some shares at a lower cost than they could be worth in the future. However, as any new project and involving investment of assets, they are requesting the entities in charge to be subject to regulations and requirements of the country or countries where they are being marketed.

Is it regulated?

The SEC has been one of the entities that has set the standard for regulation in the cryptocurrency industry, and in the case of security tokens, they are no exception, although they must be approached from a slightly different legal standpoint than other types of tokens.

Security tokens must be subject to compliance requirements, such as Know Your Customer processes, applied by accredited investors or persons, or also through a service company or authorized agent, etc.

Although the same regulations are looking for a way to separate them for the different types of tokens, both security and utility tokens, many regulators think that all are security tokens as long as they can be quoted or exchanged for another cryptoasset or currency.

That is why the SEC urges that in order to launch this security token, compliance with all regulations for financial assets is required even if they do not consider it. The regulatory entity also explains that it is not possible to massively advertise an ICO, where anyone can acquire this financial asset.

The perfect example of a security token is the SEC.

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SEC stands for the U.S. Securities and Exchange Commission. It is a U.S. government agency that regulates markets and protects investors in the United States, as well as overseeing mergers and takeovers.

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Utility Token

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A utility token is a type of token that assists in the capitalization or financing of projects for startups, companies or project development.

Utility tokens as opposed to security tokens and shares do not provide ownership rights to a part of a company.

Utility tokens should not be confused with coins (Bitcoin , Ethereum, or Binance coin, etc.), as they are not removable and are based on third-party blockchain. However, similar to coins, utility tokens are valued only for their inherent functions and properties.

This type of token is widely used to obtain financing for a project under development or to be developed. And although their purpose is not to serve as an investment, there is a lot of speculation with them and unrealistic development expectations are sometimes given.

In the same way that certain products are accepted for purchase prior to launch, a startup can create utility tokens to later enable access to the services or products it is developing.

Some differences between a utility and a security token, since it is often confused with a security token:

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UTILITY	SECURITY
They are not regulated.	They are regulated by the securities laws of each country.
Highly speculative security.	Value associated with the company's shareholder and final value.
High tendency to practice scams due to the lack of regulation.	The regulation of these tokens avoids scams, providing greater security to investors.

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As examples of utility tokens Filecoin is a good example. It raised $257 million through an ICO that has subsequently enabled its owners to access its decentralized cloud storage platform.

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Filecoin is both a cryptocurrency and a decentralized blockchain-based storage system and the goal is to store data in a decentralized manner.

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Equity Token

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Equity tokens are a special class of security tokens present on the blockchain. They are mainly characterized by the fact that they play the role of an equity asset in the traditional way.

One of the most prominent models in recent years in terms of investment is the issuance of shares or participation of companies through public offerings in a secondary market. Within the world of crypto assets, this practice can best be identified with equity tokens, although it can also be done through equity crowdfunding with the difference that in general, in the latter, blockchain technology is not incorporated through a token or smart contract. This dynamic is fundamentally based on the fact that those who buy shares of the company have the expectation of recovering their investment through an increase in the value of their shares. Issuing companies, in turn, have the possibility of obtaining financing more quickly than in the traditional way, highlighting the simplification of credit entry barriers as one of the main advantages.

In most countries, it is not possible to make public offerings of shares due to stock market laws, except for companies that are listed on a stock exchange or are private investments. In the case of platforms focused on equity crowdfunding, there have been established locks that capture some aspects of the Stock Market such as: establishing the qualification of investors, the amount of investment, the number of investors, the financial statements of the companies issuing shares, to mention a few.

Bitcoin equity tokens can also be used for the representation of real estate in a straightforward manner.

This is one of the most common forms, as it reduces many of the processes involved in selling or buying real estate.

Equity tokens emerged not long after the emergence of the blockchain and Bitcoin on the global market.

Already by then many companies wanted to see how to take the Initial Public Offering model, better known by the acronym "IPO", to the next level.

The idea they came up with was precisely these tokens. With their invention they made it possible for many companies to have the possibility of issuing both voting rights and shares on the BTC blockchain (and later, other cryptocurrencies).

By achieving this, the entire cryptomarket was made more dynamic, since it is now perfectly valid to represent debts through equity tokens.

A example of an equity token is Neufund

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Neufund is an equity financing platform. We are primarily aimed at startups with the legal form of a Limited Liability Company (LLC), or similar. Companies can, through the platform, sell investment shares, which are represented with tokens -equity tokens to be more precise all through blockchain technology. In other words, Neufund functions as a virtual marketplace where investors in search of investment and companies in search of funding come together.
Individuals, or companies, can invest in the project of their choice with dollar, euros, etc.. or the cryptocurrency Ether. In return, they receive equity tokens, the investment shares of the company. That these tokens represent an investment in the company is legally supported by the fact that the company generates shares to the called Nominee. The Nominee is a legal figure that becomes a shareholder of the company and participates with the shares in the proceeds of a possible sale. The Nominee in turn transfers his participation to the owners of the equity tokens, the investors.

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I say goodbye commenting that this task has enriched me a lot, this is certainly one of the best ways to learn about the crypto world, thank you professor @pelon53 for the task, I really liked the topic.
I hope you like it!!!

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