Differences between Utility Token and Security Token
Despite the differences in functionality and development purposes, Security Token and Utility Token both inherit security capabilities thanks to blockchain technology.
Utility Token or Token is created and used according to pre-designed features. Users can use the Utility Token to enable corresponding features in the developer ecosystem. For example, GEM Token in the GES Global project, the owner uses GEM to make transactions, purchase and sell items…
Basically, Utility Token is not used in investment, so it is avoided bay law. The greater demand for products and services of the project, the higher the value of Utility Token
Security Token or Investment Token is a form of electronic stock. Security tokens are usually released during the ICO phase of the project. This token must follow the legal regulations. Security Token holders will be able to contribute to the project, thereby giving them a better view of the potential benefits of the project.
In general, Utility Token with Security Token differ in function. The difference comes from the profitability of Utility Token and Security Token. Individuals or organizations investing in Security Token can easily see the future profits such as dividends, guaranteed from the issuer. Security Token holders are entitled to vote on the development direction of the project. However, the entire operation process is still in charge of the company.
Utility Token is not not used for investment purposes, but its value is directly proportional to the service and product needs of the publisher. Moreover, Utility Token is continuously supported and developed to solve practical problems, and promises to be profitable in the future.
Security Token is depended on investment laws and it is limited to release. Therefore, the owner avoids legal risks. However, the liquidity of Security Token is not high because the investment law makes it impossible for anyone to invest and invest in it.
Therefore, Security Token can affect the efficiency of the entire network and more difficult to develop the community. But in return, Security Token when listed helps the company prove transparency and security before investors.
On the other hand, Utility Token can stabilize prices according to market demand and supply. For example, if the Utility Token price is too high, the market demand decreases and vice versa. Utility Token value will increase when associated with the project and maintain growth.
Both Utility Token or Security Token are secure due to development on the Blockchain platform. Investors need to know the nature and features of each token to make an appropriate investment policy.