Security Token

A security token is a type of cryptocurrency that represents ownership in a real-world asset, such as equity in a company, debt, or even real estate. Unlike utility tokens, which provide access to a product or service within a blockchain ecosystem, security tokens offer legal rights and protections, similar to traditional securities. For example, holders of security tokens may be entitled to dividends, profit-sharing, or voting rights, depending on the terms of the token issuance. This combination of blockchain technology and traditional securities laws makes security tokens an attractive option for investors seeking both transparency and legal protections.

One of the key advantages of security tokens is their ability to enhance liquidity for traditionally illiquid assets. For example, real estate properties or shares in private companies can be tokenized and traded on blockchain-based exchanges, making it easier for investors to buy and sell fractional ownership. This opens up new opportunities for investors who may not have had access to these assets before and provides issuers with a broader pool of potential investors. The transparency and efficiency of blockchain technology further enhance the appeal of security tokens, as transactions can be executed quickly and securely.