A “security” is a tradable financial asset. The Howey-Test helps to tell if an asset is a security:
A contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party, [is a security under the US Securities Act]
This is often simplified to:
- Was there an investment of money?
- Was the money invested in a common enterprise?
- Was there an expectation of profit?
- Are the profits solely from the efforts of the promoter or a third party?
Examples for security tokens can be found by looking for security token offerings (STOs): icoholder.com, coincodex.com, . SolarStake and L’Osteria are two recent examples I found there.
Bitcoin is not a security token, because the money is not invested in a common enterprise.
Equity Tokens
Equity tokens are a form of security tokens that allow the holders to have some ownership rights. Although I found this being mentioned a couple of times, I haven’t seen a concrete public example. If you know one, please share it!
Asset-backed tokens
The tokenization of assets makes them tradable. Instead of trading the asset itself, you trade the token. It was similar to paper money: Instead of trading gold, you trade paper which represents a certain amount of gold. The issue with asset-backed tokens is the lack of oversight. Of course, the issuer of the token can claim to back the asset is backed by anything. Without actual checks, this claim isn’t worth anything.
Assets that can be tokenized are:
- Precious metals: PAXG and DGX are backed by gold
- Company shares: Instead of trading company shares via well-known exchanges, they could be traded as crypto tokens. I couldn’t find a single example where this is actually done.
- Other commodities: The Petro (XPD) was claimed to be backed by oil and mineral reserves. I haven’t seen other examples.
- Real estate: There are multiple tokens around real estate and several countries which look into representing real estate as a crypto token. The IHT Coin seems to go in this direction, but it also makes the impression that it’s not ready. The concept is nice, but there is no ready-to-use product as far as I can tell.
Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://levelup.gitconnected.com/the-7-types-of-cryptocurrencies-you-must-know-3b26b2ce0eb8?source=rss——-8—————–cryptocurrency
