Cryptocurrency tokens are digital assets that are built on top of an existing blockchain network. Tokens have become a popular way for businesses to raise funds through Initial Coin Offerings (ICOs) and are used for a variety of purposes such as payment for goods and services, voting rights, access to certain features, and more. In this article, we will explore the different types of cryptocurrency tokens with examples for each.
- Utility Tokens
Utility tokens are used to access or purchase services or products within a blockchain network. These tokens are not primarily designed as a store of value or investment, but rather serve a specific function within the network. Examples of utility tokens include:
- a) XCAD Network (XCAD): By tokenizing the interaction of each creator’s audience and their content, XCAD Network gives creators the DeFi tools they need to build an economy that rewards them for their efforts. The utility token used here is XCAD.
- b) LunrToken (LUNR): The utility token Lunr was created for LunarCrush. A social intelligence tool called LunarCrush analyzes global social media data to produce insights that cryptocurrency investors can act on.
- Security Tokens
Security tokens represent ownership in an asset, such as stocks, real estate, or commodities, and are subject to government regulations. Examples of security tokens include:
- a) Polymath (POLY): Polymath is a security token platform that enables the creation, issuance, and management of security tokens on the blockchain.
- b) Bcap (Blockchain Capital) (BCAP): Additionally, they are a group of businesspeople who work hard and invent new ways to use the venture model. They developed the Security Token in April 2017 when they established the BCAP, a tokenized venture capital fund funded by a security token issuance.
- Payment Tokens
Payment tokens are designed to be used as a means of exchange for goods and services. These tokens are similar to traditional currencies in that they are a store of value and can be used to make transactions. Examples of payment tokens include:
- a) Bitcoin (BTC) : Bitcoin is the most well-known payment token and is accepted by many merchants as a form of payment.
- b) Bitcoin Cash (BCH) : With its quick transfers, small fees, secrecy, and increased block size, Bitcoin Cash (BCH) seeks to become a reliable form of electronic cash.
- Governance Tokens
Governance tokens are used to participate in the decision-making process of a blockchain network. Holders of these tokens can vote on proposals for network upgrades, changes to the protocol, and more. Examples of governance tokens include:
- a) Maker (MKR): Maker is a decentralized lending platform that enables users to create stablecoins. Holders of MKR tokens can vote on proposals related to the platform’s governance and risk management.
- b) Rarible (RARI) : The RARI token is used by Rarible, a creator-focused NFT marketplace and issuance platform, to empower users who actively engage with the system. The RARI token, which is used to reward active users and for taking part in the protocol’s governance, is a crucial component of the platform.
- Non-fungible Tokens
Non-fungible tokens are unique digital assets that are verified with the help of blockchain tech. They are a type of digital certificate of ownership that can be bought and sold like physical assets, such as art or collectibles. NFTs can represent a wide range of digital content, including art, music, videos, and even tweets.
- a) “Everydays: The First 5000 Days” by artist Beeple, which sold for $69 million at a Christie’s auction.
- b) NBA’s “Top Shot”, which sells digital collectible highlights of basketball games as NFTs.
Lastly, there are many different types of cryptocurrency tokens, each with their unique features and characteristics. These tokens have become an important part of the blockchain ecosystem, enabling businesses to raise funds and users to access a wide range of services and products.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any projects.
Image Source: Photo by Kanchanara on Unsplash // Image Effects by Colorcinch