Rather than conferring a tangible benefit on the investor, a security token typically represents a share in the company who issued it.
This could be access to cloud storage space, for instance, whether now or in the future.Ī security token, on the other hand, need not have a utility. Most commonly, this benefit is access to a particular system, or the receipt of a coin that in turn offers access to some service. Typically, when a user invests in a utility token, they receive some definable benefit in return. Usually, utility tokens are Ethereum based, as this is one of the simplest ways of making a new token and programming it so the user is granted access to some utility. A utility token is a ‘coin’ backed up by a project, and this is the type of investment most of us are used to making. Most people will be more familiar with utility tokens than security tokens, even if we do not often call utility tokens by that name. At the most basic level, tokens can be divided into two types: utility tokens and security tokens.
#TOKEN DEFINITION FULL#
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