Crypto Academy Week 10 - Homework Post for Professor @pelon53

in SteemitCryptoAcademy3 years ago

You should do your own research and answer the following points in your own words.

1.- What is Security Token? And explain an example.

2.- What is Utility Token? And explain an example.

3.- What is Equity Token? And explain an example.

My task for @pelon53 assignment

What are Security tokens

Security tokens are intended to reflect full or partial ownership interests in properties and/or organizations.
Security tokens denote absolute or partial possession of a piece of property (for example, shares in a company, real estate asset, works of art, etc.). All security markers may be used to represent real or intellectual property when you have a stake in a business. By the use of the blockchain and its related public ledger, security tokens have the advantage of adding significant transparency to traditional paper stocks. The blockchain now makes the structure, distribution, and potential adjustments to security tokens transparent to all.

The cornerstone of the Finance 3.0 business will be security tokens and the digitized assets they serve, promoting creativity, acceptance, and affordability across the entire financial sector.

If issuers, investors, KYC providers, wallets, exchanges, regulators, and developers can't work together under the same arrangement and under normal regulation, security tokens will never be recognized in any meaningful way.

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picture credit to pexels

Benefits of Security tokens:
Token holders receive dividends from the company. Every time a startup reports a profit, investors receive additional coins.

  • Some investors can influence the development of the company through the functions offered by blockchain technology.

  • Due to strict regulation, the likelihood of scam is practically eliminated, which contributes to the growth of trust and improvement of the image of the cryptocurrency market as a whole.

  • Startups can attract hundreds of investors through Security token offerings (STO).

Disadvantages of Security tokens:

  • Due to the broad nature of the definition, Many coins that accidentally fall into the Security token category are faced with an uncertain outlook due to the inability to remain within the tight regulation.

Siafunds, an example of security token
The Securities and Exchange Commission (SEC) designated Siafunds as securities in 2018.
By collecting a share of revenue as the network expands, Siafunds incentivize and allow the Sia management, and investors to sustain and expand the Sia network.
Siafunds are tokens used on the Sia network for revenue sharing; a 4% charge from any storage-related transaction on Sia is distributed to Siafunds holders.

What are utility tokens?

Utility tokens are a kind of token that is becoming more common in the blockchain system. These tokens exist primarily in the blockchains they serve as accessibility components. The versatility they provide is a more fascinating principle of these tokens. They change current ideas drastically and develop new frameworks to increase their participants' capabilities.
Utility tokens grants the holder the right, to some degree, to participate in the network — to use the network to vote for network management and to update its services. In this, utility tokens differ from security tokens, with which you receive income simply by owning them.

Benefits of utility tokens:

  • Can be used to motivate behavior - utility tokens can be traded through bitcoin and then through fiat money.

Disadvantages of utility tokens:

  • Since the value of tokens is based on supply and demand, they are characterized by high volatility.

  • Due to the ease with which utility tokens are created, there are some difficulties with quality assurance. It often happens that issuers create coins, raise capital, but buyers never get access to the product.

Filecoin, as an example of Utility token
Filecoin is a project by Protocol Labs, a developer of the IPFS framework, to build a decentralized storage network with embedded cryptocurrency (Filecoin, FIL). It has been in development since 2014. The project's aim is to enable some computer users to gain FIL for other users by storing data on their hard drives that they no longer need.

Some IPFS components (IPLD, libp2p, libp2p pubsub) are required to be included in the platform, as well as Proof-of-Spacetime (PoST) and Proof-of-Replication (PoRep) protocols. The first helps network participants to demonstrate that they will have enough space to store information within a specific time frame, while the second is intended to remove issues with storing multiple copies of the same data.

How will the Filecoin network work?
Clients, custodian miners, and receiver miners are the three parties involved in the Filecoin scheme. In the Storage Market, customers position a storage argument at a given price with a specific replication factor. They strike a bargain with the miners-custodians and give them their hashed data in exchange for a reward. The mining guards assign the files to free hard disk sectors which are fixed in the allocation table (blockchain) with private keys to the files given to the client. Miners make a deposit in the scheme, which they risk losing if their Internet connection is lost or they are unable to validate data storage.

pexels-photo-210574.jpeg
picture credit to pexels

What are Equity Tokens

Equity Tokens These are stocks sold by any start-up in which individual investors or corporations own the Blockchain and the Blockchain voting rights. These tokens provide an investment security as they contribute to the development of the Blockchain network, and incentives are paid according to their success on the market and their interchangeability.
Equity tokens are a similar to security token that represents ownership of an asset, such as a company's stock.
The term "equity token" usually connotes "power" or "ownership."

Benefits of Equity token:

  • Allow investors to invest in blockchain-based companies while abiding with the laws of the issuing jurisdiction's regulator.

  • Allow entrepreneurs to use a model to finance new products.

  • Will provide a basis for regulators to evaluate token offerings.

BF Token (BFT), as an example of Equity token
A global online investment network that offers financial creativity and technology to investors.
The project began in 2010, and it has since grown to become a forum that has attracted over 47 thousand investors. The project's main aim is to popularize the investment market by making things simpler to users using blockchain technology. Industries lunching their token will improve the efficiency of the project's parties' interactions.
Their main goal is to allow eligible investors to pool their funds to invest in the financial and technological futures.
The project team has a long history of fruitful partnerships, goals met, and evidence of work performance. However, this does not change the fact that a large number of ventures are focused on the field of investment, which simplify the essence of BFT

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