There are different token classifications based on the various characteristics of the tokens. The main classification uses functionality to divide tokens into utility tokens and security tokens. Utility tokens generally represent access to a service or can function as a medium of exchange within an ecosystem.
Security tokens, on the other hand, represent financial assets. For instance, a company could issue tokenized shares during an ICO, granting the holder ownership rights and dividends. From a legal standpoint, these would be identical to traditionally-distributed shares.
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