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Security tokens are some of blockchain’s most popular and growing applications. Why are they so promising and special? The reason lies in their function. They are designed to connect blockchain technology and traditional markets. 

Interesting, right? Before we enter into the world of security tokens, we have to first understand what a security is. 

What is security? Let’s make it clear

In traditional finance, a security is defined as a financial tool that can be traded and has a certain value. When a company issues a security, it aims to raise capital. This security is then purchased by investors. 

We can split traditional securities into two categories:

Equity securities 

Equity securities are similar to a stock, for they represent ownership share in a company. If you own an equity security you can profit from it through capital gains, as you earn a proportion of the company’s revenue. A typical equity security is common stock. It must be said that only corporations can issue equity securities. 

Debt securities 

Debt securities represent any debt owed by an issuer, be it the government or a company, to an investor called “lender”. When you think about debt securities, the first example that comes to mind is a government or corporate bond. Fixed-rate bonds and zero-coupon bonds are the most common types of bonds.

A security token can be any kind of asset: debt, stock, commodity, and so on. Security tokens are easy to trade. If you have shares in a company you can exchange those shares with other investors at any moment. 

What’s the deal with security tokens?

At the beginning of the article, it was mentioned that security tokens behave as a sort of bridge, connecting traditional finance and the blockchain network. As such, they can improve traditional transactions, for they remove the need for a third part. In traditional finance, transactions can be expensive because they are linked to the presence of a middleman (a banker, f.i.). Being decentralized, security tokens can also enhance the execution speed of a transaction. Given these two simple aspects, it’s inevitable that, in the future, they will become more and more attractive for investors. 



What is LYO CREDIT?

LYO CREDIT (LYO) is the token created to work in the LYOPAY ecosystem of business applications. You can use it to stake, buy and sell products and services, pay transaction fees with a discounted rate on trading, and for e-commerce, crowdfunding, card payments and much more. 

You can spend your LYO CREDIT tokens to pay transaction fees – between wallets, for purchases and withdrawals or in exchange trading. As you can see, there are multiple things you can do with this token. Do you want to discover more?

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