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Cryptocurrency token

Cryptocurrency token

A cryptocurrency token is a token used to represent a fungible or tradeable asset or a utility that resides on its own blockchain. A token can also serve as a substitute for other things.

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Cryptocurrency token

A cryptocurrency token is a token used to represent a fungible or tradeable asset or a utility that resides on its own blockchain. A cryptocurrencytoken can also serve as a substitute for other things.

Article

The technical, orand traditional, definition of a "token" in blockchain and cryptocurrency ishas been as another word for "cryptocurrency" or "cryptoasset." But, as the blockchain ecosystem and use cases have increased, the word token has taken on more meanings, and could be better considered as an umbrella term to describe digital assets that run on its own blockchain, and digital assets that run on top of another cryptocurrencies'cryptocurrency's blockchain. This gives tokens a largermore extensive range of potential functions, such as governance, video game items, orand identification vehicles. But all tokens can be traded or held.

...

Further, cryptocurrencyCryptocurrency tokens can be differentiated from digital assets, although some definitions include tokens and digital assets as a single definition. Often,Even evenin these definitions, see tokens are typically seen as a subcategory of a digital asset, asbecause a digital asset can be broadly understood as a non-tangible asset created, traded, and stored in digital format, which includes, in a blockchain context, cryptocurrency coins and tokens. In that way, a token is a more specific unit of value developed on top of blockchain networks, and often sharingshares compatibility with the cryptocurrency coins of the network. Put simply, all cryptocurrency coins and tokens are digital assets, but not all digital assets are cryptocurrency coins or tokens.

...

Often tokensTokens are typically described in terms of their standards, whichwith widely used token standards includingstandards—including the ERC-20 token standard, which allows the creation of tokens on Ethereum's ecosystem of decentralized apps. OrAnd ERC-721, which was designed to create non-fungible tokens that are individually unique and cannot be interchanged with similar tokens.

...

Further, tokensTokens are programmable, permissionless, trustless, and transparent. This means tokens are meant to run on software protocols, composed of smart contracts, which outline the features and functions of the token as well as the network's rules of engagement. Permissionless describes the ability for anyone to participate in the system, whileand trustless descibesdescribes the lack of one central authority offering control over a system. Instead, the token and the blockchain run on rules predefined in the network protocol. And transparency implies that the rules of the token are viewable and, verifiable, and followed.

...

The differentiation between a cryptocurrency token and a cryptocurrency coin is perhaps simpler. Although cryptocurrency coins were largely understood as, and could continuehave tohistorically bebeen understood to a degree to be, cryptocurrency tokens, they have been differentiated with the expansion of the roles of cryptocurrency tokens and the more limited role cryptocurrency coins continue to inhabit.

...

In this expanded context, cryptocurrency coins are considered a native asset of a blockchain network that can be traded, used as a medium of exchange, and used as a store of value. A coin is issued by the blockchain protocol on which it runs, and this is why it is referred to as that network's native currency. In this way, coins can be used to pay transaction fees, and to incentivize users to keep a network secure.

...

Coins are also used to exchange value, allowing a coin holder of a coin to exchange the coin for goods or services, can be heldhold toit increasefor inincreased value (if the coin's native network increases in value), or can beexchange exchangedit for a fiat currency. Typically, a coin is decentralized and relyrelies on code (smart contracts) to manage issuance and transactiontransactions; theyit areis built on a blockchain and areis used to enforce the rules of the system in an automated and trustless fashion; areand it is secured using cryptography to further secure the underlying network.

...

Tokens can be used in a variety ofvarious ways, unlike coins, which have a fixed use case. Tokens can be held for value, traded, staked to earn interest, and used with decentralized applications (dApps). Often, even though a token may be built on top of a blockchain, like Ethereum, the token will only be capable of being used on dApps or DeFi projects built on the same blockchain, with limited interoperability between blockchains.

...

For example, an ERC-20 token will be used mostly with other DeFi projects and dApps built on the Ethereum blockchain, but cannot be used in place of the Ether coin, which is the native cryptocurrency coin of the Ethereum blockchain used for staking and governance.

...

0Types of cryptocurrency tokens

Type1
Description

Privacy tokens

As suggested by the name, privacy tokens are used for privacy applications. There are various reasons for better privacy in cryptocurrency transactions, for personal privacy and security, and for use in sensitive transactiontransactions, although these tokens have also been used for crimes and scams. There are various ways privacy tokens ensure transaction privacy, such as coin mixin, anonymity techniques, and offline tranasctions.

Real world asset tokens

Also known as a security token, this could be an important token category as regulation grows in the cryptocurrency ecosystem. A real worldreal-world asset token is a token responsible for turning real-world assets, such as real estate, into digital tokens. These are similar to NFTs, which offer similar functionality. But the real world asset, or security, token can be differentiated in its use case, especially as the popularity of NFTs have been largely focused on art, video game items, and identity mechanisms in blockchain ecosystems, and with limited real-world asset representation so far, although this continues to grow.

Utility tokens

These tokens refer to an asset integrated with a blockchain that allow users to purchase a good or service in the future, and, unlike a security token, do not represent a direct investment into a platform, but rather can sustain a platform's economy through the service provided. Utility tokens tend to be versatile, and can be integrated for various purposes, such as governance tokens which are a type of utility token.

Timeline

August 22, 2022

Australia announces intent to use 'Token"Token Mapping'" as framework for cryptocurrency regulation.
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Cryptocurrency token

A cryptocurrency token is a token used to represent a fungible or tradeable asset or a utility that resides on its own blockchain. A cryptocurrency can also serve as a substitute for other things.

Article
Definitions:
  1. A token is a type of digital crypto-assets, giving owners conferring the right to own something assets: product, service, or security.
  2. The term cryptocurrency token can be used to represent many different forms of "tokenized data" that represents a cryptographic string of letters and numbers. For example, a cryptocurrency token can be used to describe a cryptocurrency such as Bitcoin, or be used to refer to a digital asset existing on another cryptocurrencies blockchain such as an ERC-20 token on the Ethereum blockchain. If no specific context is given a token should be assumed to represent a cryptocurrency that exists on another cryptocurrencies blockchain.
Description:

The token is very similar to a digital signature. But if the digital signature is regulated by government law then the token is not. It created many problems for using tokens in business and everyday life. If you bought a token desfor a car, that confers your right to own the automobile, you would not get it through the court. That means, the first holder of the token can sell it for you but must not give you real assets.

The main attribute of the token against the non-fungible token (NFT) is standardization. You can create a token for fiat currency, gold, oil, and other things that have a definite standard. But for non-standard things like pieces of art, second-hand goods, etc, using NFT.

Usually, the tokens issuing on their own or third-party blockchain networks. That created different types with individual characteristics: TRC-20 (Tron), QRC-20 (Qtum), NEO-5 (NEO), ERC-20 (Ethereum), BEP-20 (Binance).

Overview

The technical, or traditional, definition of a "token" in blockchain and cryptocurrency is as another word for "cryptocurrency" or "cryptoasset." But, as the blockchain ecosystem and use cases have increased, the word token has taken on more meanings, and could be better considered an umbrella term to describe digital assets that run on its own blockchain, and digital assets that run on top of another cryptocurrencies' blockchain. This gives tokens a larger range of potential functions, such as governance, video game items, or identification vehicles. But all tokens can be traded or held.

Tokens as digital assets

Further, cryptocurrency tokens can be differentiated from digital assets, although some definitions include tokens and digital assets as a single definition. Often, even these definitions, see tokens as a subcategory of a digital asset, as a digital asset can be broadly understood as a non-tangible asset created, traded, and stored in digital format, which includes, in a blockchain context, cryptocurrency coins and tokens. In that way, a token is a more specific unit of value developed on top of blockchain networks, and often sharing compatibility with the cryptocurrency coins of the network. Put simply, all cryptocurrency coins and tokens are digital assets, but not all digital assets are cryptocurrency coins or tokens.

Often tokens are described in terms of their standards, which widely used token standards including the ERC-20 token standard, which allows the creation of tokens on Ethereum's ecosystem of decentralized apps. Or ERC-721, which was designed to create non-fungible tokens that are individually unique and cannot be interchanged with similar tokens.

Further, tokens are programmable, permissionless, trustless, and transparent. This means tokens are meant to run on software protocols, composed of smart contracts, which outline the features and functions of the token as well as the network's rules of engagement. Permissionless describes the ability for anyone to participate in the system while trustless descibes the lack of one central authority offering control over a system. Instead, the token and the blockchain run on rules predefined in the network protocol. And transparency implies that the rules of the token are viewable and verifiable, and followed.

Token versus coin

The differentiation between a cryptocurrency token and coin is perhaps simpler. Although cryptocurrency coins were largely understood as, and could continue to be understood to a degree to be, cryptocurrency tokens, they have been differentiated with the expansion of the roles of cryptocurrency tokens and the more limited role cryptocurrency coins continue to inhabit.

In this expanded context, cryptocurrency coins are considered a native asset of a blockchain network that can be traded, used as a medium of exchange, and used as a store of value. A coin is issued by the blockchain protocol on which it runs, and this is why it is referred to as that network's native currency. In this way, coins can be used to pay transaction fees, and to incentivize users to keep a network secure.

Coins are also used to exchange value, allowing a holder of a coin to exchange the coin for goods or services, can be held to increase in value (if the coin's native network increases in value), or can be exchanged for a fiat currency. Typically, a coin is decentralized and rely on code (smart contracts) to manage issuance and transaction; they are built on a blockchain and are used to enforce the rules of the system in an automated and trustless fashion; are secured using cryptography to further secure the underlying network.

Tokens and use cases

Tokens can be used in a variety of ways, unlike coins which have a fixed use case. Tokens can be held for value, traded, staked to earn interest, and used with decentralized applications (dApps). Often, even though a token may be built on top of a blockchain, like Ethereum, the token will only be capable of being used on dApps or DeFi projects built on the same blockchain, with limited interoperability between blockchains.

For example, an ERC-20 token will be used mostly with other DeFi projects and dApps built on the Ethereum blockchain, but cannot be used in place of the Ether coin, which is the native cryptocurrency coin of the Ethereum blockchain used for staking and governance.

Tokens are often thought of as being easier to develop than coins, and their use cases have grown in part due to this and due to their use in DeFi organizations; for example, they have seen increasing application as non-fungible tokens (NFTs) used in open markets or in video games, and they have been used for security or identity tokens, issued to verify users. From this has grown a large group of other types of tokens:

Types of cryptocurrency tokens

Type1
Description

DeFi tokens

DeFi tokens are used in various applications involving finance, such as trading, lending, borrowing, derivatives, synthetics, insurance, and more as new DeFi projects are built. These platforms tend to steer away from traditional cryptocurrency platofrms and work to enable users to often work in peer-to-peer networks, in which the native DeFi token is important, as it can be used for borrowing, loaning, or farming tokens. They tend to be related to exchange tokens.

Exchange tokens

These are often used to help an exchange differentiate itself from competitors, and can be used to pay fees, buy and sell cryptocurrency coins, and power community operations. Often also called native exchange tokens, they can be used for various other schemes in a token exchange, depending on how the exchange decides to use the token. And, in some cases, when traded against other cryptocurrency coins, they can begin to take on characteristics of coins. But, as most, if not all, exchanges are built on a blockchain that is not their native blockchain, these exchange tokens will remain tokens.

Governance tokens

Governance tokens are often issued by DeFi or dApp projects and are used for the purpose of decision making in regards to the protocol's future. These tokens offer holders voting power and a say in the direction of a protocol, and could be likened to exchange listed securities or shares of a company. These tokens are essential to create decentralized organizations or applications, as without the voting power offered by governance tokens a centralized leadership group of a given project will continue to steer the project's course. The governance token also increases the transparency in the direction of a project, often including discussion and debate with the project developers for a future direction.

ICO tokens

An ICO (Initial Coin Offering) token is often thought of more as a token developed by a cryptocurrency project, rather than a cryptocurrency coin offering for a blockchain, that is used to raise money, and could be thought of as a fundraising token as much as ICO token. This token is often used as a source of capital for new startup companies, and as more DeFi projects have found other sources of funding, and in response to larger market changes, these tokens have been used less.

Non-fungible tokens (NFTs)

Perhaps the most popular type of token, NFTs are digital certificates of ownership to a unique asset on the blockchain. It can be used to represent a variety of assets, such as photos, videos, audio, collectibles, real estate, virtual worlds, memes, GIFs, digital content, or any file of value on a blockchain. NFTs can be owned by a single person at a time, and when they are traded they often include payments back to the originating creator or artist (they are often associated with art). This can helps artists, creators, and collectors oto sell items, and they are widely traded on NFT marketplaces.

Token use cases

As more enterprises wade into the world of cryptocurrency and blockchain, and as the possibilities of blockchain technology, DeFi, and dApps continue to grow, the potential use cases for tokens continue to be discovered or developed. Some use cases include:

Use cases for cryptocurrency tokens

Use case
Description

Cryptocurrency rewards

DeFi platforms often rely on investors who lend their cryptocurrency funds or stake their tokens into a liquidity pool, and often they will receive rewards to incentivize their taking part in a project. Often these rewards are usually paid out as cryptocurrency tokens.

dApps

Cryptocurrency tokens are integral to dApps, such as games or social media platforms, as they are often required to login or participate on a given dApps. The specific use case will depend on the specific application.

Decentralized finance (DeFi)

DeFi refers to alternative financial systems built on blockchain technology, and often these projects have tokens specific to their use cases and ecosystem used as their official currency. These could be used to get a loan for a lender, or to put up as collateral for one of those loans.

Digital user identities

Digital user ideas can be tokenized, and this can even be used to move the digital technology towards more government and regulatory use cases, as a decentralized digital identity held on a token can be used to verify access to digital services and software.

Governance

For governance, tokens can be used to give a token holder voting rights in a cryptocurrency project, allowing them to make and vote on proposals to determine the specific cryptocurrency, and often the more governance tokens held the more voting power the token holder has.

Timeline

August 26, 2022

Taliban outlaws crypto in Afghanistan and starts arresting token traders.

August 25, 2022

RBTR token launches the arbitrage robot token in the cryptocurrency industry.

August 24, 2022

Cryptocurrency exchange Coinbase to offer liquid staking token before Ethereum merge.

August 24, 2022

Coinbase announces cbETH wrapped Ethereum staking token.

August 23, 2022

Bitfinex offers new chain split tokens ahead of Ethereum merge.

August 22, 2022

Australia announces intent to use 'Token Mapping' as framework for cryptocurrency regulation.

August 2, 2022

Cryptocurrency custody technology provider Fireblocks integrates Tokeny for token minting.
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Cryptocurrency token

A token can have various definitions. Tokens exist in currency systems and computing.

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🔥THE NEXT 100X CRYPTO COIN IS LAUNCHING SOON?!! (GET IN FIRST?!!)🚀🚀🚀

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March 8, 2022

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YOK Ticker: YOK Contract Address: ​ Chain: Nervos Godwoken Polyjuice Beware of scams! YOK token is deployed only on Nervos Godwoken Polyjuice Network.
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🔥THE NEXT 100X CRYPTO COIN IS LAUNCHING SOON?!! (GET IN FIRST?!!)🚀🚀🚀

March 8, 2022

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Shiba Inu: Elon Musk & SHIB Holders predict $0.001 per SHIB | Cryptocurrency NEWS

March 11, 2022

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Crypto Coin vs Token (Differences + Examples)

May 18, 2021

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YOK Ticker: YOK Contract Address: ​ Chain: Nervos Godwoken Polyjuice Beware of scams! YOK token is deployed only on Nervos Godwoken Polyjuice Network.
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Article

The term cryptocurrency token can be used to represent many different forms of "tokenized data" that represents a cryptographic string of letters and numbers. For example, a cryptocurrency token can be used to describe a cryptocurrency such as Bitcoin, or be used to refer to a digital asset existing on another cryptocurrencies blockchain such as an ERC-20 token on the Ethereum blockchain. If no specific context is given a token should be assumed to represent a cryptocurrency that exists on another cryptocurrencies blockchain.

Definitions:
  1. A token is a type of digital crypto-assets, giving owners conferring the right to own something assets: product, service, or security.
  2. The term cryptocurrency token can be used to represent many different forms of "tokenized data" that represents a cryptographic string of letters and numbers. For example, a cryptocurrency token can be used to describe a cryptocurrency such as Bitcoin, or be used to refer to a digital asset existing on another cryptocurrencies blockchain such as an ERC-20 token on the Ethereum blockchain. If no specific context is given a token should be assumed to represent a cryptocurrency that exists on another cryptocurrencies blockchain.
Description:

The token is very similar to a digital signature. But if the digital signature is regulated by government law then the token is not. It created many problems for using tokens in business and everyday life. If you bought a token desfor a car, that confers your right to own the automobile, you would not get it through the court. That means, the first holder of the token can sell it for you but must not give you real assets.

The main attribute of the token against the non-fungible token (NFT) is standardization. You can create a token for fiat currency, gold, oil, and other things that have a definite standard. But for non-standard things like pieces of art, second-hand goods, etc, using NFT.

Usually, the tokens issuing on their own or third-party blockchain networks. That created different types with individual characteristics: TRC-20 (Tron), QRC-20 (Qtum), NEO-5 (NEO), ERC-20 (Ethereum), BEP-20 (Binance).

Edits on 8 Dec, 2018
Dawson Sewell
Dawson Sewell approved a suggestion from Golden's AI on 8 Dec, 2018
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The term cryptocurrency token can be used to represent many different forms of "tokenized data" that represents a cryptographic string of letters and numbers. For example, a cryptocurrency token can be used to describe a cryptocurrency such as BitcoinBitcoin, or be used to refer to a digital asset existing on another cryptocurrencies blockchain such as an ERC-20 token on the Ethereum blockchain. If no specific context is given a token should be assumed to represent a cryptocurrency that exists on another cryptocurrencies blockchain.

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