Security Token Offering [STO]: Defined in CryptoCurrency

Security Token Offering [STO]: Defined in CryptoCurrency

A Security Token Offering (STO), is defined as a way for investors to use their money to support a new cryptocurrency project in a way that US Securities and Exchange Commission (SEC) will approve. 

Originally, investors would participate in an Initial Coin or Token Offering (ICO/ITO) and in return received some crypto. The hope was that the team would develop something valuable with the money.

The problem is, in the near future, ICOs and ITOs may not comply with American SEC laws. That means some cryptocurrencies who have already had an ICO or ITO may have future regulation and penalties applied.

However, an STO complies with many of the rules and regulations expected to be used in the cryptocurrency space.

A security is an investment that is backed by real-world value. In other words, it represents something actually valuable:

• A security could represent a tiny ownership of a company (like a stock).
• A security could represent money a government or company borrowed and promises to pay you back (like a bond).
• A security could also represent ownership of some other asset, profit, or revenue. An STO uses this model.

To invest in an STO, you must be an accredited investor. As an individual that means you must meet one of these two requirements:

• A single individual needs an income of at least $200,000 or a couple with at least $150,000 for the last two years and expect to earn the same or greater this year.
• Net worth of over $1,000,000 excluding the value of your primary home.

Transaction [TX]: Defined in CryptoCurrency

Transaction [TX]: Defined in CryptoCurrency

Transaction or TX, is the transfer of money from one person to another for a business deal.

Total Supply: Defined in CryptoCurrency

Total Supply: Defined in CryptoCurrency

Total supply is the complete amount of coins currently available for a cryptocurrency not including any coins that were burnt. Burning coins is the action of sending cryptocurrency to an address which is unspendable.

Tokenize: Defined in CryptoCurrency

Tokenize: Defined in CryptoCurrency

Tokenize is the process of converting physical, real-world valuables into something of digital value called a token that lives on the blockchain; Let’s say you own a house worth $500K, if want to use the value of your home to raise just $50,000, you would need to go to a bank and go through the process of getting a mortgage. 

But if you own a painting or jewelry and want to get a loan, the process completely changes and might not be possible at your bank. With tokenization, you can take virtually any assets and put all or part of its value on the blockchain. The value is represented by tokens and the number of tokens is arbitrary. In other words, $50,000 of your home could be placed into $1,000, $100, or $0.01 tokens.

With tokenization, you can sell any part of an asset and raise much-needed money. Because these tokens are exchanged on the blockchain, the data is publicly available, and cannot be manipulated making it virtually impossible for anyone to get scammed.

Equity Token: Defined in CryptoCurrency

Equity Token: Defined in CryptoCurrency

 

An equity token is defined as a digital tool that represents partial ownership in a company.

Equity tokens are similar to a stock in that they represent a tiny fraction of ownership of a company. 

Equity tokens are used by new companies to raise money for future growth and operations. They can also used by existing companies to raise more money for expansion.

Security Token: Defined in CryptoCurrency

Security Token: Defined in CryptoCurrency

A security token is defined as a digital tool that represents a real-world, physical asset.

The security token, is similar to a coin or currency in that it is valuable, except its value is backed by a real-world asset. 

In other words, the token could theoretically be traded for a tiny fraction of artwork, a house, jewelry, a house, etc. 

Coins and cryptocurrency on the other hand are purely digital (created using computers) and don’t represent something physical.

Utility Token: Defined in CryptoCurrency

Utility Token: Defined in CryptoCurrency

Utility token is defined as a digital tool that provides access to a product or service including software, digital content, etc.

Similar to a token in a kid’s arcade, utility tokens are designed to provide access to a system. Unlike coins or currency, they are not designed as a store of value. 

Instead they have programmable potential built in. In other words, utility tokens are designed so programmers can build software around or in them and users can interact with the software using the tokens.

Some tokens like Ethereum were built so that other cryptocurrencies and tokens could be built on top of them. OMG is a cryptocurrency built on Ethereum. There are games and productivity apps also built using Ethereum’s token. EOS is another token built using its own system, independent of Ethereum.