5 Types & Frameworks of Token: You Should know

In this article, we will discuss the token classification. 

1. Crypto Currency- It used as a store-of-value or means of payment; the unit of account. Not issued by a central authority. It can be mineable or pre-mined. 

2. Tokenized Asset- Gives access to assets like gold, even in a micro transcation scale. The underlying asset needs to be held by the issuing party. Thus introduces counterparty, risk, contrary to cryptocurrency. 

3. Tokenized Platform- Platform- like network, not owned & operated by a single before users had limited roles in a platform, now roles are distributed and available to every network participant. Value (Financial/utility) flows freely through the network.

4. Token-as-a-share: A tokenized instrument to invest in companies (though currently on no regulated basis) that has characteristics of stock and currency(e.g. ICO replacing IPO). Shares on steroids: flexible, programmable via smart contract. Currently, a high uncertain token class as regulatory frameworks are only beginning to emerging technology. 

Types of Tokens

1. Utility Tokens

A digital token of cryptocurrency that is issued in order to fund the development of the cryptocurrency and that can be later used to purchase a good or service offered by the issuer of the cryptocurrency sold utility tokens as a method of fundraising for the start-up.

2. Security/Equity Tokens

Equity tokens function more like a traditional stock asset. In other words, equity token holders possess some form of ownership in their investments.

3. Reward Tokens 

Reward tokens are a fantastic incentive in the classroom and can be used as a tool to influence classroom behavior, student motivation, and much more.

4. Asset Tokens

Asset-backed tokens are blockchain-based units of value that are pegged to real-world assets, such as company shares, real estate, diamonds, or commodities.

5. Currency Tokens

Currency Token: Currency Token, also called cryptocurrency, ERC20 token creation service is the origin of the token. The most well-known example of a coin is Bitcoin. Other examples of Currency Tokens is Ethereum (or Ether) and Ripple.

Read More:  What is the Difference b/w Ethereum & Ether


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