This way an individual can invest in a developing project and a company can raise funds without any loans or support from a third party such as banks The main problem is that there is no regulation or any enforcement on this field which cause quite a lot of scams and frauds Bitconnect is an excellent example it Currently, it seems like everyone is talking about Security Token Offerings (STOs). From YouTubers, investors, and gurus to reputable news outlets, there is a massive amount of exposure regarding these offerings around the industry. So, What is an STO? In simple words, Security Tokens are, in essence, cryptographic tokens that can pay the owner dividends, entitle them to a share of profits, pay them interest, or, they can be used to reinvest into other Security Tokens. The main difference from ICO investment it that you got shares in the company that you invest in Besides, there is a prerequisite to qualify a crypto token as a Security Token. As a requirement, the token must pass the Howey Test, which set out in the case of SEC vs. Howey (1946) in the United States. This means that ONLY if the token aligns with the following rules, it will be considered a security token. Finally, numerous different types of token confer various rights and rewards to the purchaser. Let's explore these for a moment: Right: By acquiring a particular token, the holder will then grant certain rights within the platform of that token. For example, by owning DAO Coins, you could have obtained voting rights within DAO. This would have allowed you to have a say in which projects receive funding and which do not. Value Exchange: Tokens, in effect, create value and monetary system within its platform. These tokens allow buyers and sellers to trade with real value within the confines of the platform. This can help to govern rewards when specific tasks have completed. The ability to create and maintain value within the system is a crucial role of tokens. Fees: Tokens can act as a method of entry, to be allowed to use particular functionalities within the system itself. Function: A token doing this can allow an owner to enhance the experience of people who use that particular system. An example of this would be allowing a token holder to host advertisements within the system. Currency: Tokens can be used as a form of currency for exchanges both inside and outside of the platform, dependent on their value at the time. Earnings: A token with this characteristic would assist in the fair division of any profits or any other financial benefits that may apply to investors and token holders.