Fundamentally, there are three different types of tokens: equity, security, and utility.
The equity is akin to the common stock, as they provide the owners with a share in the company ownership with voting rights. The security could be compared to the preferred stock, they pass the Howey test for being considered an investment, and thus are subject to legal regulations (for example, the regulations of the U.S. Securities and Exchange Commission, SEC) as they can enter the real life and be exchanged into fiat currencies. On the other hand, the utility tokens are never to be used outside the project; they provide access to a product. Here we’ll focus on the latter ones.
As an exclusively in-service currency, the utility tokens do not interest the law. The companies have several reasons to issue such. First, they allow raising money for the project, which is still being developed, operating as a form of crowdfunding. Second, they provide advertisement for the project (for example, if they are distributed for reposts and reviews). Finally, they can become a filter for the client base (if, for instance, they are shared based on a particular distinction).
Some of the examples of utility tokens include Filecoin, a cloud storage system that accumulated $200 through ICO, and Civic, which distributed 1 billion tokens granting access to identity verification services. During ICO, the tokens are normally sold at a much lower price, which will explode subsequently should the service become popular, thus rendering their purchase a risky, yet potentially wise decision. However, the investors and investment advisors should be careful and conduct a thorough analysis of the offers. The principal input to the worth of the token is the quality of the product the company produces and the success of the company itself.
Consider an example with the ChangeNOW service. It is a non-custodial fast exchange service, and now it is issuing its own token, which strikes the balance of advantages of old-good cryptos and the innovation that is to eliminate their drawbacks. The service is successful and is developing rapidly, making the community happy, as it requires no sign-ups, imposes no limits on the exchange and provides the best rates for exchanges. Therefore, its token, NOW token has high growth potential.
It is an Ethereum coin based on the ETC20 platform, which speaks for itself — the most profitable cryptocurrencies utilise the same platform. Ethereum has won acclaim from the corporate clients, which none of the rivals (except Bitcoin) has matched. NOW tokens will be on private sale for professional investment funds only at a pre-sale price of 0.2 USD. The token will never be available for purchase by individuals and is exclusively distributed with twitter draws, and 40% of a total pool of 200 000 000 NOW is to be played out for reposts and reviews, acquired through airdrops or bounties — i.e. virtually gifted out.
The tokens will give the users a range of privileges, such as fixed rates and enhanced technical support. NOW tokens will be listed on popular exchanges in August 2018. ChangeNOW itself has a thoroughly developed business roadmap, which they are sticking to quite firmly: the number of currencies they support is constantly growing, in the nearest future, they are planning to integrate with multiple partners and service providers and push the decentralization even further — this ensures the dramatic increase in value.
Finally, the company promises to repurchase and burn half of the tokens from circulation, thus further adding on to the potential of the value increase.
These factors make this new player a strong attraction for anyone seriously involved with cryptocurrencies.