A security token is a digital asset that conveys value from an asset or group of assets to a token and reflects ownership or other rights. Security tokens are, to put it simply, traditional investments like stocks, bonds, or other securitized assets in digital form. For instance, a business that needs to raise money for an expansionary project may elect to issue digital tokens that represent fractionalized ownership of the business rather than issuing shares. Then, it might make this token available to investors on a platform that accepts digital security tokens.
Retail investors cannot yet purchase security tokens, but numerous institutions are working to create and provide them.