Explore securities tokens

WHAT IS A SECURITY TOKEN?

 

ERC 1400 – Security Token Standard

A Security Token shares many of the characteristics of both fungible (erc20) and non-fungible tokens (erc721). Security tokens are designed to represent complete or fractional ownership interests in assets and/or entities. While most tokens have no limitations on who can receive, or participate in the token sale, the security tokens offerings restrict token transfers to verified investors only.

HOW DO THEY DIFFER FROM UTILITY TOKENS?

The concept of utility tokens is fairly well understood in the blockchain space today. Utility tokens represent access to a network, and your token purchase represents the ability to buy goods or services from that network — kind of like an arcade token being used to play a game without owning it. Utility tokens give you that same type of access but just to a product or service.

On the other hand, security tokens represent complete or fractional ownership in an asset (such as shares in a company, parts of a real-estate asset, artwork, etc). Having a stake in a company, real estate, or intellectual property can all be represented by security tokens.

Security tokens offer the benefit of bringing significant transparency over traditional paper shares through the use of the blockchain and its associated public ledger. Security token structure, distribution, or changes that could affect investors are now accessible to all via the blockchain.

In short, security tokens give the holder an ownership right and potential access to additional benefits such as dividends, voting rights and other benefits that can be provided by the issuer.

STO VS ICO?

An Initial Coin Offering (ICO) is an unregulated method to raise funds for a new blockchain, cryptocurrency, or utility token project. In an ICO, a percentage of the cryptocurrency or utility token is sold to early backers of the project in exchange for fiat or other cryptocurrencies.

An STO is a regulated method to raise funds. Security Tokens are backed by assets (such as a company, real estate, artwork, or shares in a fund).

With that being said, the value of a security token can increase or decrease on the basis of the perceived value of the asset. STOs and Securities provides access to assets that were otherwise not accessible. Forms of ownership are receiving an upgrade from pieces of paper to blockchain-based tokens.

WITHOUT A STANDARD

Security Tokens will never be adopted in any meaningful way if issuers, investors, KYC providers, wallets, exchanges, regulators and developers cannot work together within the same framework.

To understand more about securities tokens follow the original source of the information:

https://thesecuritytokenstandard.org

 

ERC 1400 – Security Token Standard

A proposed standard for security tokens – incorporating differentiated ownership, error signalling, document references, gate keeper (operator) access control and issuance / redemption semantics.

ERC 1400 – Security Token Standard

Authors: Adam DossaPablo RuizStephane GosselinFabian Vogelsteller

ERC 1400 – Security Token Standard

ERC 1410 – Partially Fungible Token Standard