Security Tokens – digital crypto analogues of shares or stocks. These analogues are called security tokens and connected to real securities that represent tokenized assets. In some cases, these tokens represent the real capital in the company, fulfilling the role of the “digital share”. Security-token is not necessarily connected to the share in the company, they can be used to divide the owner’s rights to a wide range of assets, from real estate to art. They can provide to the holder a number of rights. This can be the possession of shares, periodic dividends, the influx of finance, payment of debts, the right to vote and much more. All these rights are secured by a smart contract that manages tokens.
Tokens are built on blockchain technology. In most cases token issuers use one of already existing technologies to create their tokens. The most popular platforms for token issuing are Ethereum, NEO and EOS. These platforms allow anybody to make new token and smart contract with a basic knowledges in programming. Implementation of STOs required improving the token structure, so they can meet the requirements for the traditional securities.
One of the first of a kind security type token was suggested by Ethereum community and was named ERC-1400. ERC-1400 significantly differs from previous types.