The digital world and technological advances have enabled tangible assets to represent the blockchain ecosystem digitally. This is done through tokens, which are an increasingly popular investment tool for real estate sales, securities (bonds, stocks, derivatives), and debt, among others. Let’s see the types of tokens and what each of them represents.
Security tokens are the digital representation of a security backed by a real-world asset. They can be fractionalized and are equivalent to a percentage of the property they represent.
Transactional tokens, better known as cryptocurrencies, serve as a unit of exchange to acquire goods and services. Related to these, companies use permission tokens as a marketing strategy where they give users cryptocurrencies as a reward for their data and loyalty to the brand.
Utility tokens also work as an exchange alternative in specific ecosystems—for example, video game coins. You can buy goods and services with those coins, but they are only valid in that particular game. In this ecosystem, loyalty tokens are also given to constantly active players and can only be spent on that specific game.
Governance Tokens allow users to debate or vote on how a specific system should be governed—for example, making decisions in a company or holding elections in a country.
Non-Fungible Tokens, better known as NFTs, are unique tokens representing a unique asset. They cannot be fractioned and are used to describe the possession of an asset. They can be used in the real estate industry to purchase an entire property, not a fraction. Nowadays, its primary use is in the art industry.
Let’s go deeper into the definition of security tokens and what they consist of. They represent ownership of an asset, just like NFTs. However, they can be fractionalized. So then, they are the digital version of traditional securities (shares, derivatives, bonds), debt, or fractions of real estate.
By buying one, you will become the owner of a fraction of the asset, property, or business it represents, and you will receive dividends proportional to your ownership percentage.
Since NFTs represent tangible assets, they can stand for large amounts of money; therefore, they face even stricter regulations than other blockchain investment products. In addition, NFTs have greater credibility than other types of tokens. They are regulated by the SEC (Securities and Exchange Commission), the regulatory entity for securities in the United States.
Security tokens and traditional securities have similar properties. For example, just as the stock market sells fractions of your shares, it is also possible to sell only part of a token. Also, tokens can be traded on secondary markets and instantly exchanged for money.
You can find further details about security tokens at this link. With BRET Real Estate Tokenization, you can invest in security tokens backed by the United States real estate market for only $100. So what are you waiting for to start investing?