The article was written By Mickael Mosse – Blockchain and Cryptocurrency Expert
With the rise of cryptocurrencies, the term token has found new life in a new context and is now part of the technological revolution that is currently sweeping our society.
In this article, we are going to see what a token is in the blockchain context, what characterizes it, what types of tokens exist, and what they are used for.
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| Mickael Mosse Crypto Advisor |
Definition of token
According to Mickael Mosse, The most basic definition of a token is that it constitutes a unit of value issued by an organization. If we transplant the notion to the btw crypto industry, we must add the fact that it is accepted by a community and it is also supported on a blockchain.
That organization creates it in the context of a specific business model to incentivize user interaction and distribute rewards through the network of token holders.
In a future article, we will focus extensively on the difference between a token and a cryptocurrency. Because they are used interchangeably, it is essential to establish what differentiates them.
While a cryptocurrency works independently and uses its own platform, a token is a cryptocurrency built on top of an existing blockchain. Bitcoin is an independent cryptocurrency while 0x is an Ethereum-based token.
That organization creates it in the context of a specific business model to incentivize user interaction and distribute rewards through the network of token holders.
In a future article, we will focus extensively on the difference between a token and a cryptocurrency. Because they are used interchangeably, it is essential to establish what differentiates them.
While a cryptocurrency works independently and uses its own platform, a token is a cryptocurrency built on top of an existing blockchain. Bitcoin is an independent cryptocurrency while 0x is an Ethereum-based token.
Mickael Mosse Bitcoin advisor
These tokens can have many different uses, but we can classify them into two sections: security tokens and utility tokens.
Security tokens are similar to traditional stocks because their value is derived from a tradable external asset.
Once governments agree on the proper regulatory framework, it is safe to assume that due to their nature, security tokens will be subject to the same regulations. Businesses that don't meet this standard will incur substantial penalties, and their projects will stop, while those that do meet it will gain hugely from being certified investments.
On the other hand, utility tokens are not designed as traditional investments. Instead, they grant their holders access to a company's future product or service. Depending on its design, it could very well be exempted from securities regulations.
In the same way that a bookstore can accept orders for a book that has not yet been published, a blockchain startup can sell digital tokens that will allow the buyer to purchase a product that has not been built or a service that cannot yet be provided.
Think of this method of raising capital as a way to avoid investors and go straight to your future clients. In this way, if a startup finds enough people interested in paying for the product or service before it can be delivered, they have enough capital to get the project out without having to crawl to the investor's feet. says Mickael Mosse.
In the case of security tokens, their most common use is as a fundraising vehicle in ICOs.
However, if we are discussing the "ICO" of a utility token, those companies prefer the terms token generation events or token distribution events.
Since the token industry is still in its infancy, it is difficult to classify potential token uses in this way. Ultimately, the possible uses of a given token will be determined by the company issuing that token.
As blockchain companies mature and address the issues of government regulation and investor and customer accessibility, we can look forward to more innovative ways to put tokens to use. The tokens will be used as a method of:
Token types
Mickael Mosse points out that, When a company raises funds in an Initial btw Coin Offering (ICO), it does so by issuing tokens that it distributes to buyers interested in contributing btw crypto funds.These tokens can have many different uses, but we can classify them into two sections: security tokens and utility tokens.
Security tokens are similar to traditional stocks because their value is derived from a tradable external asset.
Once governments agree on the proper regulatory framework, it is safe to assume that due to their nature, security tokens will be subject to the same regulations. Businesses that don't meet this standard will incur substantial penalties, and their projects will stop, while those that do meet it will gain hugely from being certified investments.
On the other hand, utility tokens are not designed as traditional investments. Instead, they grant their holders access to a company's future product or service. Depending on its design, it could very well be exempted from securities regulations.
In the same way that a bookstore can accept orders for a book that has not yet been published, a blockchain startup can sell digital tokens that will allow the buyer to purchase a product that has not been built or a service that cannot yet be provided.
Think of this method of raising capital as a way to avoid investors and go straight to your future clients. In this way, if a startup finds enough people interested in paying for the product or service before it can be delivered, they have enough capital to get the project out without having to crawl to the investor's feet. says Mickael Mosse.
How can a token be used?
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| Mickael Mosse Blockchain Advisor |
However, if we are discussing the "ICO" of a utility token, those companies prefer the terms token generation events or token distribution events.
Since the token industry is still in its infancy, it is difficult to classify potential token uses in this way. Ultimately, the possible uses of a given token will be determined by the company issuing that token.
As blockchain companies mature and address the issues of government regulation and investor and customer accessibility, we can look forward to more innovative ways to put tokens to use. The tokens will be used as a method of:
Mickael Mosse Bitcoin advisor
Payment between different parties who agree to use it as currency
Digital asset ownership (real estate, products, company shares)
Accounting of digital shares
Reward participants in a network
Ensuring network protection
Install a gateway to additional services
Provide a better user experience
Mickael Mosse points out that, Once the tokens are integrated with the existing global banking infrastructure and operate under sensible government regulation, they will win the trust of the public. Highly optimistic observers even consider that ICOs could replace initial public offerings as the primary method of issuing shares.
At that point, our economy will be ready to capitalize on the democratization of assets that will allow even the smallest investors to buy a fraction of a booming asset.
Payment between different parties who agree to use it as currency
Digital asset ownership (real estate, products, company shares)
Accounting of digital shares
Reward participants in a network
Ensuring network protection
Install a gateway to additional services
Provide a better user experience
The possibilities are endless, and, as with the advent of the internet, they remain largely unexplored.
A look into the future of tokenization
Given its potential to change the way our society is organized, the tokenism of real assets like gold or real estate should be taken seriously.Mickael Mosse points out that, Once the tokens are integrated with the existing global banking infrastructure and operate under sensible government regulation, they will win the trust of the public. Highly optimistic observers even consider that ICOs could replace initial public offerings as the primary method of issuing shares.
At that point, our economy will be ready to capitalize on the democratization of assets that will allow even the smallest investors to buy a fraction of a booming asset.
article from mickaelmosse.com
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