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Security Tokens: Everything You Need to Know

Article by Ryan Smith

What is a security token? Touted as the next big thing in the cryptocurrency space, security tokens have been getting a lot of attention lately. The battle between regulators and unchained cryptocurrency marketplaces is unfolding. It certainly pays to be on the front lines here observing as the drama plays out.

ICOs are on track to raise capital at record levels in 2018. It’s amazing to witness this new asset class overtake traditional venture-backed funding in only a few short years. Of course, this hasn’t gone unnoticed among the authorities. As big brother prepares to step in, interesting new cryptocurrency projects and tech are forming to meet regulators head on and make sure that the future of investing stays compliant.

Most cryptocurrency enthusiasts will, by now, be familiar with utility tokens. To recap, utility tokens are a digital form of value exchange which can be used presently or in the future use of a cryptocurrency network. Today, however, we’ll focus on the new kid on the block, the security token.
What is a Security Token 
The fundamental difference in security tokens appears to be the rationale of an investor to buy it. Security tokens are considered by the community as an investment contract similar to that of traditional financial instruments. And just like those instruments, if an investor hopes to gain profit from the token through revenues, dividends, and/or favourable price movements then it is a security.

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