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Crypto Terms:  Letter S
Jun 19, 2023 |
updated Apr 02, 2024

What is Security Token?

Security Token Meaning:
Security Token - a portable device that digitally confirms a person's identity by recording personal information.
2 minutes

Let's find out Security Token meaning, definition in crypto, what is Security Token, and all other detailed facts.

A security token is a movable device that records personal information and digitally certifies a person's identity. Individuals who own security tokens might gain profit from the performance of the particular token. On occasion, they might also gain other advantages like the ability to vote.

As a result, security token holders can gain most of the same advantages as holders of stocks and other assets have. The Blockchain Capital (BCap) is among the most popular security tokens.

Traditional securities are classified into three categories: stocks, debt, and a mix of debt and equity. Bonds, ETFs, options, and futures are all instances of securities.

In theory, any of these objects can be tokenized and used as a security token. Security tokens are able to become a suitable competitor to stocks and other traditional assets in the coming years.

However, it is crucial to remember that security tokens differ from cryptocurrencies since a lot of people misinterpret the notion. Bitcoin, Bitcoin Cash, Litecoin, and other similar cryptocurrencies operate on their own blockchains. Security tokens, on the other hand, operate on an already existing blockchain, implying that it is possible for them to operate on the Ethereum blockchain.

In fact, Ethereum is the blockchain that is the most popular choice for the distribution of security tokens. There are a lot of companies out there that employ ERC-20 tokens which are Ethereum-compatible tokens that are able to function on the Ethereum blockchain via smart contracts, which are used to accomplish this.