Hello Everyone
Back again with me @chairulrizalx in our proud OCD community, at this moment I would like to share information about Tokens on Blockchain and cryptocurrencies, what's the difference between them and coins, and their benefits to cryptocurrency users, and share information about the categories and types of tokens that users can use as a place to invest or as a collection.
Hopefully, the information I share can be of valuable for all of us community members.
About Tokens
If generally in digital currencies we all know bitcoin may be a a coin that's on the Bitcoin blockchain or an Ethereum coin that is on the Ethereum blockchain. These two coins are made by a mining process.
Token is a term for accessing a Decentralized application or called DApps built on a blockchain system. In other words, Token could be a digital asset issued by a Decentralized App project which is generally used as a means of payment to buy products or things offered by the project. Tokens also have a market value, but they are not technically a currency. Most Tokens are created by a single project group for use in decentralized applications (DApps). When developers generate tokens, they can decide how many items they want to create and where the new tokens are going to be sent.
The Function of Tokens is as a digital asset to represent ownership of a project. Tokens within the blockchain world generally have several principles in their application:
1). Transparency : Because generally, tokens are in a blockchain network that implements a decentralized system, so all activities carried out by the token project are going to be easily monitored.
2). Trustless: Not subject to any authority like the govt.
3). Permissionless: Everyone can access or use tokens from a project without having to possess permission from any authorities.
4). Programmable: The token is used on top of the software protocol and uses a smart contract according to the blockchain network system used.
When developers want to create a token, they need to pay for a specific amount of crypto assets on the blockchain used; For example, if a token is made on the Ethereum blockchain, the developer must pay specific of ETH for the miners on the network to validate. After that, tokens is used in step with the aim of the creator.
One example is the ERC-20 token like NFT on OpenSea created on the Ethereum network, and Tron with their TRC-20, tokens have different functions, tokens have several types like Security Tokens, Utility Tokens, Asset Tokens, Stable coins, and NFT (Non-Fungible Tokens)
Tokens are created to have more uses than just a means of payment in a blockchain project, while Coins are only made for payments and investments. Tokens are also used for sure features as desired by Decentralized App developers. Additionally, coins may be accustomed buy crypto tokens.
Tokens and Coins are digital products of a Blockchain network system, they have significant differences. Here are the differences between tokens and coins:
| TOKEN | COIN |
|---|---|
| Operates on other blockchain network systems such as smart contracts. | Has its own blockchain network system to operate. |
| Obtained and used in certain communities and projects. | can be obtained from many projects. |
| The value and price of the token is influenced by the community and the project itself. | Coin value can be equivalent to fiat currency. |
| Made with ICO (Initial Coin Offering) rules, IDO (Initial Dex Offering), and IPO (Initial Project Offering). | Created with a Proof of Work (PoW) or Proof of Stake blockchain system in general. |
| Example of Tokens: USDT, Axie Infinity, Shiba Inu, and other) | Examples of Coins: Bitcoin (BTC), Ethereum (ETH), Eos (EOS), Tron (TRX), and more |
Token types, Categories and Features
1). Utility Token
This digital asset is meant as a way for users to urge products or services on the platform. Like initial offerings on other investments systems, utility tokens also offer their products or coins at Initial Coin Offering event offerings. Just like a company that raises funds through the purchase of shares, the crypto token here raises funds to subsidize fees and the development of its blockchain network.
When we buy utility tokens within the hope of getting more profit from the project, this can attract the attention of other parties to pay a higher price than before for the identical token. Other parties will see how the worth of utility tokens increases, so that they are afraid that if they don't buy now, they will lose the opportunity to buy utility tokens at low prices, therefore they also buy utility tokens at higher prices in the hope that in the future the token price will increase. rise even higher than the price when they first bought.
2). Security Token
This Securities Token could be representation of real assets that exist in the real world, rules that apply to security tokens are the same as those that apply to other securities. Security tokens guarantee ownership of shares in blockchain projects.
This security token is claimed to be able to restore credibility that many people have doubted. Tokens generally raise funds through ICO (Initial Coin Offerings), but unfortunately ICO are considered less accountable due to the lack of regulation for utility tokens in Initial Coin Offerings (ICO). To restore the credibility of the token, security tokens have emerged which are based on various regulations that apply the same as other securities, in other words, security tokens combine cryptocurrency technology with traditional financial systems.
3). Equity Token
Equity Tokens are tokens that represent the equity or shares in the company. Equity encompasses a significant role within the company. This is because every company is required to regulate its equity value properly and in detail. The corporate can manage its equity value by recording every asset it owns and any existing liabilities to avoid the company from being hit by a deficit, the worth of equity must be greater than the worth of its liabilities.
4). NFT (Non-Fungible Token)
NFT is a token that is represented something like a digital work of art. By having an NFT, we can claim ownership of digital work. Through Non-Fungible Tokens, gamers and digital asset collectors who are also fond of cryptocurrencies can take advantage of blockchain in their collections.
The use of blockchain turns games and other unique assets into items that are more than collectables, can be collected as a personal collection and can also be sold for money, NFT can be a representative of various collectables, ranging from sports cards, games, dolls, to real estate. What makes it very specific is that each NFT can only be used on its own platform, it cannot be used on other platforms. Even if the token is issued by the developer or built on the same blockchain.
NFT is very suitable for users who are artistic and do not want their assets to be owned by others because this tokens is exclusive and cannot be destroyed.
Features of Token
1). Tokens is a digital asset that each developer has its own uniqueness in each token even though it uses the same blockchain network.
2). generally, tokens use a blockchain network where a decentralized system is implemented it which makes transparency a priority.
3). Tokens can be used as a tool to save if you want to save digital assets for the future.
4). Tokens have various variations and innovations in them, we as users can choose tokens according to our wishes and interests.
5). With the development of technology in the field of cryptocurrency, tokens will become one of the digital assets that will be widely used by the public in the future because it provides convenience and attractive innovation for users.
