What are tokens in the world of cryptocurrency?

What is a token?

In simple words, a token is a digital certificate that guarantees the company's obligations to its owner, analogous to stock exchange shares in the cryptocurrency world.

What are the types?

There is no clear classification, but 3 types of tokens are most often used:

Security tokens (investment tokens) - created to simplify the work of investors and are essentially company shares. They certify ownership and allow you to receive dividends.

Utility tokens (service) - designed to create virtual currency within a business, company, or any platform. Usually, service tokens represent points received for the performance of company promotions, and they also include game currencies.

Asset-backed tokens are tokens backed by certain liquid assets. It can be both goods and services and oil or gold The company that issues such tokens is obliged to pay the owner the value of the token or send goods in exchange for tokens, providing users with access to certain functionality or services within the framework of the decentralized network.

Also exist the term " Tokenization " is the conversion of an asset into a digital unit. It's easier saying this process transforms a real-world asset into a digital asset that is stored in the blockchain. This one transformation allows the owner tokens to interact with real assets a lot safer and faster.

Let's consider an example. The owner of a mobile store phone tokenized its activity. Now he may sell your product with the help of tokens on a digital platform, which is to him suitable. After of this people who bought it tokens, maybe go to the store and exchange them on mobile devices.

Tokenization has many advantages :

• improved and accelerated trading exchange;
• safe storage of coins and transfers between owners;
• an opportunity to trade without intermediaries, because all transfers are regulated using smart contracts;
• expansion infrastructure and trade opportunities in general;
• simplification of work with suppliers of goods or services;
• improved security base data;
• high-speed processing transactions;
• creation secure audit.

However, you should be careful because except this, exist risks of losses or kidnapping of personal data users due to cyber attacks, and also lack of security anonymity data in the public blockchain.

Or worth creating your token?

Transformation of your product in tokens or no-decide you, considering all pros and cons.

Apply for qualified help from our fintech lawyers who will be able to provide you with a primary consultation, and also accompany output tokens for your projects.