Security tokens are digital representations of ownership in an asset, such as real estate or company shares, that are issued on a blockchain. They are designed to comply with regulatory standards, making them a secure way to raise capital and trade assets. Unlike traditional tokens, security tokens are backed by real-world assets and provide investors with rights, such as dividends or voting. These tokens are part of the broader category of blockchain technology and are often used in initial coin offerings (ICOs) or security token offerings (STOs). By leveraging smart contracts, security tokens can automate processes like compliance and transfer of ownership, enhancing efficiency in financial transactions.