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What is a Crypto token?

Alexander Richards


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Hello, thank you for your question! 

Token as a term represents a median of some other currency which is used on special occasions, in crypto word this means that token is a cryptocurrency built upon a blockchain. Every cryptocurrency has a specific type of blockchain which varies in usage, interaction, and business model.

Tokens are classified into two different types which are security and utility tokens. Security tokens are similar to shares as they draw their value from the external tradable assets; these tokens are susceptible to government regulations that control their production and usage. 

On the other hand, utility tokens aren’t similar to any traditional asset. They act as a passkey for a shareholder which grants them access on any further investment, product, or service. As they aren’t clearly defined by law, they are rarely susceptible to any regulations.

Tokens nowadays are used in many different occasions, but most commonly as:
Payment between different parties who accept to use it as a currency
Digital asset ownership (real estate, products, company shares 
Accounting for digital actions
Reward to participants in a network
Ensuring network protection
Installing a gateway to extra services
Providing a better user experience

The future of tokens is unpredictable, many experts see tokens as an asset that will replace real-world currencies, while others predict a not so bright future.

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