Token
A token is the digital representation in the Blockchain world of something that has value within a context. It is issued by a private entity and is only valid under this particular universe.
Its operation is very similar to a mileage plan within an airline. Token migration platform is a good thing that does not exist physically, but that can be used in case you want to buy a plane ticket. The more miles you have, the better positioned you will be within the airline and the greater possibility of routes you will have.
In the crypto universe, they are represented through pieces of code that contain interchangeable information and, therefore, provide the connotation of money or digital assets.
Security-Equity token
Contrary to utility tokens, security tokens are tied to financial securities and work similarly to buying and selling stock trades . The security token is essentially a digital stock certificate that records your ownership on the blockchain.
Those who buy this type of token invest in a project with the expectation that its price will increase and bring current or future benefits.
Although security tokens do not usually give any voting power to investors, some platforms devised the type of security token dedicated to it.
EQUITY-TOKEN
The equity token is a type of security token that supports a traditional asset : be it a stock or a property. This means that whoever owns it has a property, profit and voting right over this asset.
Governance token
Acquiring this type of token gives the owner the right to participate in the decision-making of the project. It allows you to propose new features, request changes, make corrections and vote for or against other decisions involving the project. With the creation of new Dapps , the governance token plays a fundamental role in achieving a balance between the decisions of the shareholders and the developers.
Governance tokens can be obtained in two ways: As a reward for participation —granted by the DAO itself— for interacting or through purchase with cryptocurrencies. The more tokens, the greater decision-making capacity.
Asset token
It is a token that allows you to support real world assets such as raw materials, goods, real estate, works of art, among others, in order to make the purchase and sale without having to move.
Popular Crypto Token Platforms
We have already talked about the different types of tokens, but do you know where they can be found? We tell you about some of the platforms where they are usually used.
Ethereum
The Ethereum blockchain is the one with the largest number of tokens running with approximately 250 thousand. The reason is that this blockchain was created for this purpose. This can be clearly evidenced in the creation of standards such as the ERC-20 token, which greatly facilitates the task of creating and deploying a cryptographic token.
Bitcoin
We cannot ignore Bitcoin. The first blockchain that revolutionized this technology is also one of the most used to create tokens. The colored coins are one of the first creations within the community that was born with the aim of representing any asset: raw materials, real estate, and even cryptocurrencies. We hope this post about the different types of tokens that exist has been useful to you. Leave us in comments what you think! And if you want to become an expert in Blockchain technology, train with the Master in Blockchain . You will learn, among other things, the basics of the new payment and financing methods to apply them within any business.
Token Categories:
All crypto tokens fall into two categories: fungible and non-fungible tokens. Here we explain their difference.
Fungible Tokens (FT):
Fungibility refers to something that is consumed by use and can be replaced. The fungible tokens (in English Fungible Token) then refer to those elements that we can change without problem.
If we go to the real world, it can be seen as a movie ticket. If I can't attend, I can give it to someone else to use and this ticket will have the same value.
Non-Fungible Tokens (NFTs)
Taking into account the previous definition, it can be deduced that a non-fungible token is one that cannot be divided or exchanged with each other since it does not have the same value. A work of art does not have the same value as another and therefore, its exchange is not possible. This is a very useful element to verify the authenticity of an asset and to guarantee the security of its ownership.
Crypto tokens, cryptocurrencies and Altcoins: main differences
In many places you will find that cryptocurrencies are often confused with tokens or Altcoins. Here we explain their difference.
Cryptocurrencies
A cryptocurrency is a standard digital currency used to make or receive payments on a decentralized blockchain, with Bitcoin (BTCUSD) being the most popular. Its functionality is only transactional, unlike other types of tokens.
Altcoins:
Altcoins are all the alternative cryptocurrencies that came into existence after the success of Bitcoin . Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH) are some common examples that came to compete and improve on bitcoins weaknesses. However, it is this one that continues to have the greatest popularity in the market.
Crypto tokens
Cryptocurrency tokens are used to facilitate transactions. They are not self-sustaining, that is, they require a chain of blocks to be able to operate, and they are generated in the format of smart contracts. These are the ones that determine the operation and limitations of this particular token within the blockchain technology.
Types of cryptocurrency tokens
Having clear the categorization of tokens and their meaning, we tell you the different types of cryptocurrency tokens.
Utility token :
The Utility tokens had their boom from the cryptographic projects that emerged in 2017 during the boom ICO . They are used to finance startups or projects with an established base in exchange for participation (either immediate or in the future). They are like a gateway that gives you certain types of rights to products and services.
Utility tokens are not intended as an investment —since they are not regulated— meaning that if the project grows, the investor will not be entitled to the profits from it.
A token, then, can be used for different purposes beyond that of payment: it can be used to pay for an object, to participate in an event, it can be an action within a company, a collectible item, an entry to a game , or anything can be represented in the real world.
