Most of you have heard of security tokens but need to learn exactly what security token is, how it works, and what its uses are. No need to question yourself; many traders who invest in crypto also don’t have any idea about a security token, which is very normal.
When we talk about traditional finance, security can be defined as the ownership of assets such as bonds or shares related to the public-traded corporation. It encompasses the power to take action for the asset. The same thing works in the world of cryptocurrency & its trading. A security token is a tokenized security that lives on a blockchain providing ownership for a valuable asset.
But what is the actual use of these security tokens? How do they help the user, and how to develop these tokens? But before going any further for tokens, let us first find out the difference between a crypto coin and a token.
Crypto Token Vs. Coin
In order to understand the functioning of a security token, there should be a representation of the difference between a crypto coin and a token.
While a crypto coin refers to those digital assets that hold some value of their own in the crypto world, some example of such currencies is Ethereum, Bitcoin, and Litecoin. They are bought and sold on an exchange in trade for money or other coins and therefore act as a medium of exchange.
While on the other hand, crypto tokens have some functioning that varies as per the type of token available in the market. A non-fungible token, for example, is a unique digital identifier that represents assets like artwork, pictures, or any digital asset.
What is a Security Token?
A security token is a crypto token representing ownership of a particular asset, commonly the share of the same company issuing the token. The method is the same as buying a specific asset from National Stock Exchange. This is why the other name for security tokens is equity tokens.
How Does a Security Token Work?
90% of teh companies create and use tokens the same way, launching a security token that entails ownership of a share in the company. They make a crypto wallet address for every investor who has taken the share and bought the token.
In order to token for any company, the potential buyers or investors have to prove their authenticity and the fact that they are eligible to buy the token. It involves investors complying with Know Your Customer (KYC) and Anti-MoneyLaundering laws.
Since it is impossible for a security token to incorporate all the rules and regulations related to the government and juridiction, most companies align with regulations by setting restrictions on who can buy or can’t buy the token.
How To Develop Your Own Security Token?
Developing your own security token is not a complex process but needs a detailed step-by-step guide that we are mentioning below:
1. Choose the rights the Token holds
Unlike a utility token, a security token provides buyers with a great return on investment. And as per your business model, you have to decide what rights the owner will get by buying the token. You also have to decide the geographic location of your token.
2. Choose the Jurisdiction Where You Want To Launch Your Token
Decide which country you want to launch your security token in depending upon its legal regulations and laws and how easy the process is to get everything done. Choosing the jurisdiction means you will decide who can buy your token.
3. Choosing the right insurance platform for your token
Now the third step is to choose an insurance platform for your token to launch your token. When choosing a partner to make it happen, you must go through all the regulations and their inclusions.
4. Creating The Token
Once you’ve finalized everything, this is the step where you’ll be creating the token. For this, you can hire any security token development service provider who has expertise in creating security tokens with the features you want on yours. Appinop Technologies is a brand name that can help you create your personalized token at affordable costs.
Creating a security token on your own can be tricky as it needs expertise and skills to create one. Appinop Technologies is a well-trained token development company that can fulfill your dream of having a security token for your own company. With their comprehensive range of crypto token and cryptocurrency coin development services, any business, whether start-ups or big MNCs, can launch their security token under pocket-friendly budgets.