Difference Between Security Tokens and Utility Tokens

[Earl Edward]

SECURITY TOKENS
Security tokens are crypto tokens issued to investors in a token sale or ICO for the exchange of their money. Crypto tokens that pay dividends, share profits, pay interest or invest in other tokens or assets to generate profits for the token holders are deemed as ‘security tokens’. Such tokens are prohibited in countries like the US and should be compliant with SEC prior to their ICO or token sale to be able to conduct in such affairs.

UTILITY TOKENS
It is also called as App Coins or App Tokens or User tokens (whatever). It is so because utility tokens ought to have some utility in the decentralized application that a team is building and raising ICO for. It is use for future access to a company`s product or service. This token are not designed as investment, if properly instructed, it can be exempted from federal laws governing securities

sources: coinsutra.com/security-tokens-vs-utility-tokens/
strategiccoin.com/ico-101-utility-tokens-vs-security-tokens/

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[wvizmanos]

If you are to invest, which of the two would you choose? (assuming that you are not restricted from joining in both types). Thanks

[ICOKite]

If you are to invest, which of the two would you choose? (assuming that you are not restricted from joining in both types). Thanks

Its better to invest on security token as compare to utility token.

[wvizmanos]

If you are to invest, which of the two would you choose? (assuming that you are not restricted from joining in both types). Thanks

Its better to invest on security token as compare to utility token.

If security is a better investment, why are SECs of US and other countries giving their cryptozens a hard time investing?

[Teebass001]

Thanks for the enlightenment. I had wanted to know the difference between the two, but I have not been chanced to my research on it. I think I prefer investing in Security tokens too

[retprogramisto]

Thanks for the useful post about the difference between security and utility tokens. Security = purely investment with the goal to earn profits (possible risk, depends on market), Utility = token has a use/function in the ICOs platform/app (less risk if you plan to use the platform and you can earn profits if the platform is widely used = higher demand for tokens)

[Earl Edward]

If you are to invest, which of the two would you choose? (assuming that you are not restricted from joining in both types). Thanks

Well, we do understand the characteristics of these two tokens, right? If "investment" is your concern, Security Token is for you. This token is purely for investment. And for the reason that-  first, it cuts down the cost of service delivery. Second, given their holder access to the decision making (which is the most promising for they have the ability to issue tokens that represent shares of company stock) and thus expect returns – but, if and only if, it will properly run. Meaning, if you are willing to take the risk. Lastly, you don't have to worry about the law and regulation for this token is fully compliant with the law as what has been mentioned. On the other hand, Utility tokens which have less risk(using the platform), are "not designed as Investment". they are said to be future access to products and services "only". However, because of its number which is fixed, the bigger the network grows, the bigger the demands it will create.