How it Works

How it works?

As we have seen, a token is a digital object that has a value and is used to represent an asset, right or utility. This means that if you have a token you have an asset with which you can acquire a specific good or access a specific service from a company that issues this token for this purpose.

Tokens are generated from programming codes using smart contracts that work within the Blockchain. The smart contract contains all the information about how each token is going to work and the incorporation of rights over these.

The holder of a token has access to certain rights, depending on their programming. These rights can be customized and individualized to suit the issuing company. Some examples are:

  • Voting Rights.
  • Rights of Governance and Participation in the Blockchain.
  • Rights of Use with respect to the asset represented by the token.
  • Rights of Use with respect to the platform.
  • Participation Rights.
  • Economic Rights.

We can also classify tokens according to the way they are offered. We can distinguish 3 different types of tokens:

Security Tokens:
A security is a financial instrument that can be exchanged on a secondary market. These types of tokens are already regulated by legislation such as the Spanish Securities Market Act, the Securities Exchange Act and the Commodity Exchange Act. They are considered as investment items and therefore must comply with certain characteristics that we will see below. These are the types of tokens we use at Expedit Capital.

Equity Tokens or Participating Tokens:
Due to the lack of regulation, there are very few companies that have tried to issue this type of token. Equity Tokens serve to redistribute the profits generated by a company among the shareholders, who would be the owners of the tokens. The state of Delaware is one of the pioneers in regulating and allowing companies to keep a list of their shareholders in a Blockchain instead of traditional records.

Utility Tokens:
These are all tokens that provide a utility to the investor. They serve for capitalization or project financing for startups, companies or project development groups. They allow future access to a company’s product or service. They differ from Security Tokens in that Utility Tokens are not created for an investment opportunity. Investors are not offered an actual stake in the monetary ownership of a company if they buy utility tokens.

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How it works?

As we have seen, a token is a digital object that has a value and is used to represent an asset, right or utility. This means that if you have a token you have an asset with which you can acquire a specific good or access a specific service from a company that issues this token for this purpose.

Tokens are generated from programming codes using smart contracts that work within the Blockchain. The smart contract contains all the information about how each token is going to work and the incorporation of rights over these.

The holder of a token has access to certain rights, depending on their programming. These rights can be customized and individualized to suit the issuing company. Some examples are:

  • Voting Rights.
  • Rights of Governance and Participation in the Blockchain.
  • Rights of Use with respect to the asset represented by the token.
  • Rights of Use with respect to the platform.
  • Participation Rights.
  • Economic Rights.

We can also classify tokens according to the way they are offered. We can distinguish 3 different types of tokens:

Security Tokens:
A security is a financial instrument that can be exchanged on a secondary market. These types of tokens are already regulated by legislation such as the Spanish Securities Market Act, the Securities Exchange Act and the Commodity Exchange Act. They are considered as investment items and therefore must comply with certain characteristics that we will see below. These are the types of tokens we use at Expedit Capital.

Equity Tokens or Participating Tokens:
Due to the lack of regulation, there are very few companies that have tried to issue this type of token. Equity Tokens serve to redistribute the profits generated by a company among the shareholders, who would be the owners of the tokens. The state of Delaware is one of the pioneers in regulating and allowing companies to keep a list of their shareholders in a Blockchain instead of traditional records.

Utility Tokens:
These are all tokens that provide a utility to the investor. They serve for capitalization or project financing for startups, companies or project development groups. They allow future access to a company’s product or service. They differ from Security Tokens in that Utility Tokens are not created for an investment opportunity. Investors are not offered an actual stake in the monetary ownership of a company if they buy utility tokens.

Articles
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