About Tokens

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Oct 15, 2018

2019 is looming out there and strong events are taking place right now in the cryptocurrency market. Today more than ever, when we speak of tokens we’re talking about assets. But what is a token exactly?

Usually, it’s an amount of money, but the possibility is open for it to represent something else entirely — membership in a program, for instance, or proof of ownership. Each token is visually conceptualized as a custom coin with a certain name and properties; consider a casino’s poker chips as analogue tokens. Many of these coins offer a value proposition of a “utility token”. The idea of a utility token is that the token is necessary to transact in a particular ecosystem.

Another type of token is the “security token,” in which a token represents a share in an organization. This token type is more like a stock, or bond, or certificate of ownership of a financial instrument.

A token is a unit of virtual currency.

Bitcoin is the primary token in cryptocurrency: the oldest, most valuable, and perhaps the most used. It serves many purposes, but they are almost exclusively financial and Bitcoin is known for the BTC digital currency on the cryptocurrency exchange.

Tokens need to be built on a blockchain based cryptocurrency platform, such as Etherium, NXT, Waves and others. A platform, akin to Etherium for example, allows these tokens to form their own financial ecosystem while leveraging the scale of an existing currency.

In early 2018 tokens became very popular with the booms of ICOs–initial coin offerings. In some cases tokens are used specifically as a funding mechanism for companies and the Initial Coin Offering ICO has become the main tool to raise money in recent times. In those cases, they act like a stock. Other tokens have purposes which cannot be completed without them.

Others are designed purely as digital currency and could one day soon could come loaded with a selection of coins that can be used in every major retail outlet. The value of the digital currencies’ token is ultimately determined by its purpose and desirability. Since anyone can issue a token on a public blockchain, only well-designed, well-intentioned, and useful tokens retain long-term value. (At least, theoretically.) Governments around the world are trying to regulate cryptocurrencies and accepting tokens as “real money”. Today, cryptocurrency is a space for unlimited innovation.