Greetings to everyone and all my friends in this lovely community, hope we're all good. Join me today as I present a post to help us have a better understanding on what a crypto token is.

What Is A Token?

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Tokens can be defined a virtual currencies or lesser denominations of cryptocurrencies. They are crypto assets which operates mostly on already existing blockchains, tokens are fungible and can also be traded. Tokens when developed are often sold and put into circulation through a process known as Initial coin offering (ICO). These ICOs are usually crowdfunding exercises in order to raise money for the development of the project.

People who hold these tokens can trade them to make profits just like every other security or crypto assets, it also be used be used for purchases and to make payments. Investors also purchase tokens, which serves as a representative to his stake or shares in that company.

Difference Between a crypto Coin and Token

People sometimes classify both crypto coins and tokens as coins, but below are the differences between both.

TOKEN	COIN
Tokens server numerous purposes based on it's blockchain an project	Coin on the other hand serves as virtual money for faster payments online.
Token are usually built and operates on already existing blockchains	Coins are built and operates on their own original blockchain.
A coin cannot be bought using a token	A token can be bought using a coin.
ICOs is the major way of distributing tokens into circulation	Mining is the major way of distributing coins into circulation

Types of Token

I'll be explaining three (3) types of token, but there are more types.

1. Security Token

A security token refer to an investment contract which can show legal possession of a digital or physical asset. The ownership of the security token must be ascertained from the blockchain.
After ownership verification, security token owners can:
• Present them as loan collateral
• Exchange their security token for various assets
• Keep them in various wallets

The original worth in security tokens Is dependent on the way it can totally redefine what its ownership means. For instance, instead of possessing a gold coin which could be really expensive and difficult to own, it has now been made obtainable for more people to possess some part of the gold coin.

Examples of security tokens is;

SiaFund:

Siafund is a security token used on the Sia network for sharing revenue.For every transaction that is storage related, a 3.9-percentenge is distributed amongst the investors of the siafund. The Sia main team currently owns on estimate 85% of Siafunds.

2. Utility Token

A utility token,is a unique token type which aids in funding a financial project for companies, or startups. The utility token is used as Babycoin in mass sales participation to raise capital for an already defined project. The utility tokens allow investors to possess future access to a projects services or product. It is a kind of access to a given value, but this is not always Obtained. The utility token is not regarded legally as investments, as many states do not have a means of regulating them.

Utility token is essential when a company needs to develop a coupon which can be traded later for access to its products or services. It is frequently used as a way to get sufficient funding for a project. For this reason, the utility token is usually circumscribed by so many speculation and hyep. It in turn makes it risky to venture into.

An example of utility token is;

Basic Attention Token (BAT):

This utility token is an ERC-20 token and it allows access to different BAT services. BAT functions majorly as an avenue of payment for publishers and content creators . The company that created BAT developed it does to create a blockchain platform which will aid contents creators from all fields to earn in a relative way.

3 Equity Token

Equity tokens refer to stocks put up for sale by any project developer where companies or investors are rewarded with voting rights and partial shareholding of the Blockchain. Equity tokens bestow a kind of assurance lto investors as they contribute to the uprise of the Blockchain network and profits are distributed depending on how the project fares in the market.

Equity Tokens will be Obliged to become an important part of Initial Coin Offerings (ICOs) in the future since they give start-ups the ability to get into the financial markets which without this token would have been difficult.
Something to take to cognisance is the challenge facing the issuance of Equity Tokens which centers on the regulations wthat are yet to be concluded via a recent bill by Delaware permitting startups to store the profile names of their investors on the blockchain and authorise stock trading.which is blockchain based.

Conclusion

Crypo coins and tokens are different. Tokens run on already existing blockchains and can serve many purposes. However both at still crypto assets. I hope my post was clear enough to further your understanding of what tokens are.
Don't forget to leave a comment, thank you for reading.