To understand the types of tokens, first of all What is a token? What does it do? Click here to find out.
Service tokens, also called user tokens or application tokens, provide access to services or products such as software, digital content, etc. That is, it is used in the access of a company to its product or service. The fact that they are not designed for investment purposes is the defining feature of service tokens. The ERC-20 tokens of the
platform are service tokens.
What is Equity Token?
created with this method, referred to as stock tokens, are similar to the public offering (IPO) system. The benefit provided by the investor in the public offering is the same as the benefit in the equity token system. This means that token holders receive dividends or fixed commissions. Securities tokens, on the other hand, are backed by real assets such as an equity, shares of a limited liability partnership company, or property. They are also subject to securities laws. It is stated that the security tokens will create a radical change in the representation of the company’s shares. In addition, there is intensive work on the use of securities tokens in the real estate sector.
What is Credit Token?
Tokens produced for credit purposes. Namely, investors lend to startups with tokens. it is an alternative way of valuing their money. For example, an investment is made and at the end of the period a certain percentage of return is obtained on top of this return
What is Utility Token?
Some tokens can contain more than one type. For example, Sia and Digix tokens are traded as both “utility” and “equity” tokens. The token called Steemit is suitable for all three types as equity, credit and utility.