Token types: utility, security, and governance

Types of Tokens: Utility, Security, and Governance

Tokens are digital assets that represent value or utility and are stored on a blockchain. There are three main types of tokens: utility tokens, security tokens, and governance tokens.

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Utility Tokens

Utility tokens are used to access specific products or services on a blockchain platform. They have value within the platform and can be used to purchase goods or pay for services. These tokens are often issued during an Initial Coin Offering (ICO) and can be traded on exchanges.

Security Tokens

Security tokens are issued as an investment in a project or company and are regulated by securities laws. They represent ownership or equity in a company and can be bought, sold, or traded on exchanges. Security tokens provide investors with the opportunity to receive dividends, profits, or other benefits.

Governance Tokens

Governance tokens are used for voting and decision-making on a decentralized blockchain platform. They give token holders the right to vote on important decisions, such as protocol changes or platform upgrades. These tokens can also be used to propose changes or improvements to the platform.

In summary, utility tokens are used to access products or services on a blockchain platform, security tokens are used for investment in a project or company, and governance tokens are used for decision-making on a decentralized platform.

By Sonica W3 Learning Center

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