A token is an initial coin offering (ICO) and a means of attracting investment. Simply put, it is the same as a ‘coupon’, that is, some kind of right to possess a product or service. When an investor invests in a new start-up, they receive tokens as evidence of a stake in that project.

The value of digital coins is also expected to increase as the project develops. However, in practice, this pattern does not always work, so investing in ICOs is always a high risk.

Logos of different cryptocurrencies

Varieties of

Depending on their value, tokens are divided into four categories.

• Target. These are also referred to as “user tokens”. This is when a token holder has the ability to do something within the project infrastructure. Target tokens are especially often used in online games.
• Equity tokens. They are analogous to shares. When an investor buys an equity token, they are not only buying a share in a company, but also the ability to influence its operation.
• Ownership tokens. They can be used to divide any value into parts and then transfer the ownership rights. For example, a Van Gogh painting is a value that is difficult to sell or buy because of its low liquidity, but it can be made into co-ownership for the holders of certain coins.
• Reputation and reward tokens. So far, this category is less in demand on exchanges. They represent crypto medals, trophies and some sort of identity credibility.

Equity tokens

Perhaps one of the most in-demand categories of tokens is equity tokens. As it is a real asset operation, the government controls ICOs. More than once, the US Federal Securities Exchange Commission (SEC) has questioned the legality of these assets. In the US, the principle is that if a token represents an investment and there is a person responsible for its profitability – the digital asset must be accredited by the SEC. Only after it has been licensed by the SEC can it be traded on exchanges.

At BlockChain Digital Capital, the equity tokens are called BCT. On purchase, the holder receives a share in the company on the basis of a smart contract. Once a year, the holder is entitled to participate in the distribution of proceeds from the sale of its products.

As experts explain, the higher the demand for tokens, the higher their price. Demand grows due to increased revenues and an increased fund to distribute the proceeds to BCT holders. Dividends, on the other hand, are generated from the sale of the product. After each token purchase, the smart contract contributes a certain percentage to the dividend fund. So, when an investor buys BCT equity tokens, they are investing in a project that now operates in 26 countries around the world.

Check out our millionaire cryptochat. There we will talk about other important news related to the world of blockchain and decentralisation.