The Blockchain technology keeps growing and which is a massive news as it gives a lot of positive note to take home. The Blockchain technology having a lot of features that makes it stand out and one of the things that I have discovered that the Blockchain technology possesses is tokens majorly the security tokens and the utility tokens. Today I will be going more deeper to explain in details what those two entails.
Even though these two types of tokens is mostly misinterpreted but I have come to discover that they really function quite so amazing. They have different features that distinguished them and which I will be explaining in details today. But before even moving deeper, there is a need for me to explain what are really security tokens. Security tokens as the name implies means digital asset that are regulated by securities
Most of the times the security tokens serve as representative for financial assets and helps to serve as dividends and voting rights for the companies that those securities are. Briefly talking about the examples of security tokens that exist and that which we have. We have the tZERO and many more of them.
Now moving to the other side of it which is the utility tokens. In fact this is one of the most important type of utility tokens also that exist. It is also called the digital asset that majorly is designed for some services in the Blockchain network. Utility tokens are majorly used during the ICOs which is called the initial Coin Offering. Most of the time, the ICOs are used to raise capitals. Examples of utility tokens are BAT which is called the Basic Attention Token and we have another example of the utility tokens which is the Filecoin also.
Now before rounding up, i will shortly like to talk about the difference between both. When it comes to the security tokens, it actually talks about the financial ownership of an asset. Most of the time, security tokens are seen as investments vehicles. While for utility tokens, it is used for a product or service based on the Blockchains.
Talking about the risk and liquidity option. Security tokens are more of investment and so It is more risky that the utility tokens because it deals with a lot of investors. While for utility tokens, since they are mostly used for services and products, they are or have higher liquidity most especially those ones on the crypto exchanges. At the end of the day, both of them shared the same technology which is the Blockchain technology and so still share some similarities in between.