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Types of ICO tokens
ICOs are something that I’ve been writing about frequently. They have been really impressive and are making their mark in the world. They have been the new buzz word in the financial sector as well in the tech world. Not often have we see the investment bankers and the techies working closely together to develop something interesting until the ICO world started to frame up.


These Initial coin offerings raised more money in the first quarter of 2018 itself than the entire of 2017, according to a report from CoinDesk. With USD6.3 billion already raised and a lot more to follow everyone seems to be looking deeply into the functioning and possibilities to raise funds or invest in these tokens for personal gains.


But what are these tokens and how does a person deal with them? Or can one use them anywhere apart from exchanges are the common questions.
What we have understood and also various reports from the web and our experience that we can classify these ICO tokens in five basic types. Investors and business need to be super cautious about these before starting an ICO or raising funds via them.


Currency Tokens
Bitcoin is an example of a currency token. The token is used to transfer and store value. They function like money where the pricing is defined by demand and supply. However, these tokens are not issued or regulated by any central authority and as we all know Bitcoin was the first use of this technology or rather the technology was developed for bitcoins and found other uses later. These tokens generally take some time to mature their value as is very volatile in the initial period due to limited user base.


Utility Tokens
These tokens are generally used to power processes in their blockchain ecosystems. Something like a smart contract execution can be done with utility tokens. They aren’t created to be traded outside their ecosystems. The value for these tokens depends on the demand for the power the decentralised applications (DAPPs) they are developing. . These tokens are like a pre-paid user fee. Steem, filecoin are examples of some utility tokens.
Asset Tokens
These tokens usually act as a proof of ownership of a physical asset. Like we see in case of Ethereum Link  tokens that are attached to .99 grade sliver. The value of these tokens is determined by the value of the assets like fixed or deprecated. People add vehicles, arts, and other similar assets to blockchains where these tokens are attached to the assets.  These are more stable set of tokens and are being introduce a greater level of security in the physical asset market. They are a little less popular as their prices are directly tied to the actual assets.


Reward token
These tokens as the name suggests are reputation tokens. They signify the trustworthiness of someone holding them in the ecosystem. It depends on the participation of a user on the blockchain platform. They do not require high liquidity, making them a little difficult to assign value to. They are like the tradition reward programs or air miles.


Equity Tokens
Equity tokens are again self explanatory. They represent the stake in a particular organisation and the percentage you own is linked to a specified number of tokens. Some companies have started leveraging smart contract technology to issue stock line tokens in the future.


They might become the most regulated token class. These tokens fall under the preview of the SEC as well according to a recent ruling. Which means companies that fall under this class will have to follow a stipulated set of regulations. They are also most desirable assets as they guarantee ownership.

For any clarifications of consulting on the type of ICO you want to conduct, reach me out at akshay@blockinventors.com
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