Normally we are hearing in the Blockchain ecosystem various terms such as token, cryptomonies, digital coins, but even though they are very similar, their definitions are quite specific to each particular case.
In order for you not to get confused about it, and to be able to distinguish one asset from the other, in this post we’ll give you a brief overview of these four digital asset classes that flood the crypto space every day.
It’s one of the most common terms we hear in the crypto world. But what are tokens really?
Tokens are digital assets that can be used within a specific project that have no legal tender value.
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While they are very similar to cryptosystems and we often confuse the two assets, the reality is that tokens require a general Blockchain platform to function.
Some examples of tokens are INK, FLETA, MATIC, BOT, among others.
Currently the vast majority of tokens are created under the ERC-20 and ERC-721 standards, as applicable. Both types of tokens originate from the Ethereum Blockchain network, the most important token in the market.
Although there are other blockchain platforms that allow the generation of tokens such as Waves, NEM or Tron, basically Ethereum dominates the scene with more than 180 thousand ERC-20 tokens and 1,300 ERC-721 tokens.
Although some tokens are used as payment methods, this is not really their main purpose. Their main use is to generate access within decentralized „DApps“ applications, hence their particular name on the vast majority of utility tokens.
Tokens can be classified according to their use into utility tokens (Utility Token), financial asset tokens such as STOs (Security Token) and equity tokens (Equity Token).
At this point it is necessary to pause on the so-called Non-Fungible Tokens or NFT.
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With the arrival of Cryptokitties on Ethereum in 2017, the new wave of non-expendable tokens was generated, which work in a different way than the fungibles known until now and which gave a new vision especially to the blockchain ecosystem on gaming.
A token of this type is defined as a type of token that can be uniquely identified and distinguished during interaction and circulation.
The NFT, is a type of token that is unique and cannot be divided, like the collectibles we see today on many gaming platforms essentially.
Compared to fungible tokens, the key innovation of NFT is to provide a method for recording ownership of unique, indivisible assets. Because of the non-expendable feature, they are ideal for representing a ticket, a bottle of wine, a piece of jewelry, etc.
A crypto-currency is a digital currency that has its own independent ledger on the network.
With Bitcoin’s entry in 2008, the invention of the category of digital coins based on cryptography became widespread.
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Unlike tokens, what a kryptonet can do is quite limited, due to the inability to ‚program‘ it under smart contracts in order to generate a specific different instruction for which it was created.
They can have their own block chain or be based on an external blockchain. Like tokens, they can be sent or received.
Their characteristics are similar to those of trust money: they are dispensable, divisible, portable and have a limited supply. Hence their use is basically to be used as trust money, to pay for goods and services, or as an investment.
Among the most prominent example is of course Iq Option, which is now also used as a valuable refuge by many investors.