Understanding Security Tokens

Block chain technology is fast becoming a trend, and is changing the operation of the financial market. ICOs, commonly known as Initial Coin Offerings, are revolutionizing the business world through different public blockchain platforms, such as through Ethereum and Bitcoin. With ICOs, there are also crypto tokens involved in the process, concentrating on different functions such as the utility and security tokens. In this article, we are going to take a look at security tokens.

A security token is defined as a token with electronic software access and identity verification used in lieu of, or with an authentication password. They are considered to be assets that are tradable and are issued to traders and investors with the expectation of future profits. Basically, they are actual financial securities such as shares or equity in traditional assets, venture funds, start-ups and also real estate. These tokens represent stocks in the crypto currency world. As such, it is expected that these tokens will fall under government regulations.

A common feature of security tokens is they are able to provide holders with rights and obligations in a company whose securities they are buying. Investors will be able to trade security tokens through platforms such as the Zero trading software.

Understanding and familiarizing oneself with security tokens is a great first step for individuals who are interested in getting involved with an ICO investment. Just like any other investment, it is best to know more about the factors involved before making rushed decisions.

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