The word token is a very broad concept. We meet him practically every day. It occupies a very important place among cryptocurrencies, although it is often used as an alternative term, which is not entirely appropriate.
Token what is it and what is it characterized by?
Economics defines "tokens" as nunisms, but distinct from coins and banknotes. So they are chips in casinos, vouchers, vouchers and even payment tools in board games.
In the business context, the token is compared to bitcoin. So it can be said that it functions as a digital token. In practice, this means that the token can replace money. This is a great convenience for companies. If the company offers some services, you can pay for them with tokens. An organization that offers this possibility must have a special platform through which the transaction takes place.
The term "token" is related to ICO - Initial Coin Offering and Initial Public Offering. As part of such a program, a group of investors finances a project that they believe is legitimate and likely to be successful in the future. What is a token in this case? The answer is simple: a virtual token from which the income is allocated to this project.
Types of tokens
The tokens are divided into:
- utility tokens;
- safety tokens.
The first group covers the issue of tokens as part of the ICO. Their owners gain access to services offered by a specific project.
Security tokens, otherwise known as security tokens, are compared to securities. For example, if someone invests in a company and receives some shares, tokens give him the right to profit from its activities.