Do you know the difference between “tokens” (chips) and “coins” (currencies)? We use these terms extensively on Cointribune without giving you some explanations in advance. Before we start comparing utility tokens and equity tokens, let’s first explain what tokens and bases are.
encryption-token and cryptocurrencyin short
Already, the two are known to differ, but it is not that wide. A few subtle techniques between the two really play out the contrast. And they live the way they are built on a blockchain.
To quench your thirst, here are some details.
A “coin” is a currency backed by its own blockchain, like bitcoin or other altcoins (ADA, ETH, XMR, etc.).
A “token”, on the other hand, is a base that relies on an existing blockchain similar to Ethereum-based tokens (BNT, CVC, etc.).
In addition, we have three types of digital signs or signals:
- ” utility signal or utility sign / sign;
- ” security signal », Or the value of vouchers or tokens of shares;
- ” equity sign », Or a security or capital token.
Let’s just take the ” utility signs “and the” equity signals to make better progress in this presentation. Both of them greatly affect your investment decision-making process.
” utility signal or utility sign
The utility signal is often used during a Initial Coin Offers (ICO) or initial coin offers. This sign is being booked for holders have access to privileged services. Note that the utility signs they are not considered investments due to their speculative nature. They are generally used as publicity tools for the issuing company.
The utility token presents itself as a unique type of cryptographic asset that aims to raise the funds needed to develop a cryptocurrency project. At this point, the investor can afford it with cryptos or fiat at a static price. Except we don’t use it to participate in the project. But utility tokens allow basic tokens to be bought or sold on a priority basis.
After purchaseutility signalthe investor may also store in a encrypted wallet and access the services related to the project in question.
Note that the value of utility signs it will vary depending on the demand for the project. In general, they can generate profits for the buyer if the project is successful.
Bitcoin, a utility signal ?
Bitcoin is the most popular cryptocurrency, with a very large market capitalization. We designed BTC as the only digital currency for exchanges peer to peer. Its developers ensured that it was coded in its blockchain software protocols. Like Ethereum, Bitcoin has its native digital assets based on its ecosystem.
In essence, BTC is like a literal cryptocurrency and is quite important in transactions on a Bitcoin P2P network.
In addition, it should be noted that cryptographic tokens have transaction behavior that may vary depending on their implementation by smart contracts. They are not integrated in the blockchain software.
What about Ripple (XRP)? In fact, it is a utility token, similar to Basic Attention Token (BAT) as ERC-20 tokens operating on the Ethereum network.
XRP facilitates Ripple payment solutions to date. It stands out for its speed, transparency and profitability.
ATM, on the other hand, dominates the Brave browser, a global private advertising platform. It currently benefits about 54 million monthly active users and 1.4 million verified creators.
Note that XRP and ATM respectively have received huge value from their ICO.
The difference between a “security token” and a “utility token”
Now let’s get down to business!
Equity or value tokens represent the ownership of the parent company. Do not confuse it with utility signs since the way they get is not identical. The IS security signs governing sensible government bodies to monitor the financial markets. This makes them sources of returns commensurate with the financial results of the project promoters.
The equity signal differs in the method given to firms to raise capital in the cryptocurrency market. Value signals promote the sale of stock in digital form or as tokenized equity. They offer ownership opportunities to a wide range of investors at a low entry point.
Note that the two tokens mentioned above represent a meeting point between TradFi and the revolutionary market represented by cryptocurrencies. They allow investments in non-crypto businesses and attribute multiple benefits.
Note also that the security signs controlled by regulatory bodies such as the Securities and Exchange Commission United States (SEC). Because they are property of the underlying assets.
These same tokens are issued through the specific bidding process. They could be very little value for money for the company or business. Therefore, even in the case of dispersal on the geographical location of their owners, ownership of the underlying entity will be no difficulty compared to traditional offers on the equity market.
What about equity signals ?
We classify the title or capital tokens, rich in benefits, into a subset of it security signal. Their uniqueness lies in their ability to assist eagerly driven crypto investors to participate in the issuing company ‘s decision – making process.
The IS equity signals express a bet on an underlying asset, which is equal to a company ‘s stock. Except that these must respect the conditions of the supported blockchain. It should be noted that they are governed by the securities law of the issuing company’s country of registration. Investors with security signals also benefit from the legal protection of this country.
Capital tokens also enable transparent voting on corporate issues, through blockchain technology. This is in favor of gaining control by the investor community in proportion to their participation.
Other benefits to mention:
- the right to a share of profits in the form of dividends;
- the lack of legibility of the value of the token on request in the cryptocurrency market (but according to the performance of the issuing company);
- their implementation of smart contracts;
- their compliance with ERC-20 standards;
Enegra (EGX) and BFToken are among the equity signals the most common.
utility signal and equity sign
In fact, the equity signals They are an extension of the concept of stock investing Initial Public Offers (IPO). The IS equity signals intended for investors thirsty for adventure in investing their capital.
Utility signals are unregulated and provide access to a service rather than a specific investment in an asset. But it should be mentioned that they can be traded on various cryptocurrency exchanges.
On the other hand, capital companies that are already in place regulate and issue capital tokens. They grant voting rights tokens to their holders.
Novices will benefit from investing in capital or tokens equity sign. They are easy to understand as a concept. We hope that these explanations will be extremely important to you, regardless of your ranking, as an investor.
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