In the crypto realm there are 3 main types of cryptoassets that exist. In this article I'll be covering what they are in very basic terms.
Exchange Tokens
Exchange tokens are referred to as 'cryptocurrencies' and the most common cryptocurrencies are Bitcoin and Litecoin. These two currencies make use of distributed ledger technology - but are not backed by any central bank or authority. Also, they are not the same as security or utility tokens as they do not grant the same types of rights or access, however, they can be used as a medium of exchange or as investments.
Image by Miloslav Hamřík from Pixabay
Security Tokens
Security tokens are a 'specified investment' as described in the Financial Services and Markets Act (2000) (regulated Activities) Order (RAO). They provide rights such as ownership, repayments of particular sums or an entitlement to a percentage of future profits. They can also be used as transferable securities or financial instruments according to the European Union's Markets in Financial Instruments Directive II (MiFID II).
Utility Tokens
Utility tokens can be received to gain access to products and services usually provided by a distributed ledger technology (DLT) platform.
Article by Tiago Hands: https://www.instagram.com/tiago_hands
Lead image by Icons8_team from Pixabay
Reference: Cryptoassets Taskforce: Final Report, October 2018 [HM Treasury, Financial Conduct Authority & Bank of England]
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