Crypto Academy Week 10 - Homework Post for Professor @pelon53 About Tokens

There is no doubt that blockchain is causing major disruption in almost all existing industry verticals. Blockchain technology makes it possible to create a variety of new business models. Blockchain is credited as the only technology since the invention of the internet to produce useful innovations such as decentralization and trustless networks. Using tokens is one important factor, of the many, that contributes to the success of blockchain technology. In this homework, we will delve deeper into the concept of tokens that might help us get a clear picture of security tokens, utility tokens, and equity tokens.

In computer security and cryptocurrency, a token can refer to any given cryptocurrency token or token that is on the blockchain of another cryptocurrency. Tokens are assets, utilities, or units of value issued by a company. Tokens also have access rights that represent programmable or manageable assets through smart contracts and the underlying distributed ledger.

This is issued when a company launches an Initial Coin Offering (ICO) that is roughly the same as an Initial Public Offering (IPO). The main difference between an IPO and an ICO is that in an IPO you receive shares in return for the investment you will make, whereas in an ICO, you will receive a token in return for your investment. Tokens can be exchanged to access the company's products or services in the future.

A security token is a digital asset that derives value from an external, tradable asset. It is subject to Federal laws governing security. Security tokens are required to comply with these regulations. Failure to comply will result in severe consequences such as penalties and the potential derailment of a project.

It describes assets such as participation on an actual physical basis, a revenue stream, a company, or the right to pay interest or dividends. In economic function the same as bonds, derivatives, and equity. If a startup complies with regulatory requirements, security tokens offer a wide variety of applications. This is also known as a securitization token. A security token offering (STO) was built to increase investor confidence in investing in various projects.

Maybe you use a security token to access sensitive network systems such as bank accounts, for an extra layer of security. In this case, the security token is also used in addition to a password to prove the identity of the account owner.

In addition, the security token stores data to authenticate the identity of the owner. Stores cryptographic keys, which are the systems used in cryptocurrency services such as Bitcoin, but the keys must be kept secret. Others use passwords, which are coordinated with tokens and networks that are reset at constant intervals. There are also those who use biometric fingerprints to ensure that it is the original owner of the security token, who can access protected information.

Utility tokens have a broader range of functions than coins. Utility tokens do have value, but they cannot be regarded as simply money as coins.

Utility tokens can provide value to investors in a number of ways. They give users access to future products or services.

Typically, a technology startup develops a digital product or service and starts an ICO (Initial Coin Offering). Any ICO, a company that sells utility tokens. Investors can also buy tokens and use them as a means of payment on the platform developed by the issuing company.

The current utility token is a utility token developed by blockchain research firm IOHK for the city of Addis Ababa, in Ethiopia9. The token can be used for utility payments, such as electricity.

The token was created at the request of the Ethiopian Ministry of Technology and is legally mandated, thus guaranteeing that the token will be used. The utility token helps save time when paying utility bills and reduces waste, fraud and abuse. If successful, this project will cover up to 100 million citizens.

The example shows that utility tokens are very promising, because they have many uses and can fulfill a variety of roles. Utility tokens enable smooth transactions via the blockchain, allow payments for decentralized services, fund project development and many others

Equity Tokens are a type of token that is widely used to claim ownership or to demonstrate their authority over an asset. Basically almost the same as financial instruments, and almost similar to the traditional way but equity tokens have documents in virtual form such as digital certificates, proof of transactions, whereas the traditional way has physical book certificates

Each form contains the same contract information and because the equity token is decentralized, its data is encrypted and stored in blocks, where the holder has the right to take action with it.

Equity tokens not alone uphold shares or authority over assets, but also vote on them. The only difference between the equity token and the traditional way is, the use of virtual and physical methodologies as said earlier.

When a person holds 10% authority over one share and gets 1 vote together. This means that out of 100 people hold 10% and also 1 vote to decide or make decisions in the discussion of the benefits of shares