A token refers to a special virtual currency token or how cryptocurrencies are denominated. Tokens represent fungible and tradable assets that reside on their blockchains. Tokens are often used to fundraise for crowd-sourced projects, but can also be used to serve as a substitute for other things. The latter form is usually created and circulated through an ICO, or initial coin offering.
Cryptocurrencies are denominated into tokens that reside on their own blockchains.
As mentioned, tokens can be a various number of things. A token could represent a certain number of customer loyalty points on a blockchain to manage details for a retail chain, or tokens that give a user a number of hours to stream content on a video-sharing site. Another token may represent other cryptocurrencies. When a token resides on a blockchain, it is tradeable and transferrable amongst others on that blockchain.
There has been debate around the word token and that it may erroneously be used interchangeably with the words cryptocurrency and altcoins. However, they are distinct.
A cryptocurrency is a standard currency for making or receiving payments on a blockchain, with the most popular being Bitcoin.
Altcoins are cryptocurrencies other than Bitcoin; those created after it.
Cryptocurrencies and altcoins are essentially specific virtual currencies that have their own dedicated blockchains and are primarily used as a medium for digital payments. On the other hand, tokens operate on top of a blockchain that acts as a medium for the creation and execution of decentralized apps and smart contracts, and the tokens are used to facilitate the transactions.
Uses of Tokens
As mentioned, there are many uses for tokens. Here are some of the most popular:
DeFi Tokens – A new world of cryptocurrency-based protocols that aim to reproduce traditional financial-system functions (lending and saving, insurance, trading) has emerged in recent years. These protocols issue tokens that perform a wide variety of functions but can also be traded or held like any other cryptocurrency.
Governance Tokens – These are specialized DeFi tokens that give holders a say in the future of a protocol or app, which (being decentralized) don’t have boards of directors or any other central authority. The popular savings protocol Compound, for example, issues all users a token called COMP. This token gives holders a vote in how Compound is upgraded. The more COMP tokens you have, the more votes you get.
Non-Fungible Tokens (NFTs) – NFTs represent ownership rights to a unique digital or real-world asset. They can be used to make it more difficult for digital creations to be copied and shared (an issue anyone who has ever visited a Torrent site full of the latest movies and video games understands). They’ve also been used to issue a limited number of digital artworks or sell unique virtual assets like rare items in a video game.
Security tokens – Security tokens are a new class of assets that aim to be the crypto equivalent of traditional securities like stocks and bonds. Their main use case is to sell shares in a company (very much like the shares or fractional shares sold via conventional markets) or other enterprises (for instance, real estate) without the need for a broker. Major companies and startups have been reported to be investigating security tokens as a potential alternative to other methods of fundraising.
Protecting Your Cryptocurrency
Cryptocurrency and the blockchain stand to be a major driving factor in the technology of the future. However this popularity has attracted an element of cybercrime. There are several tools internet users should use to increase their online protection. One of these tools is SaferNet.
SaferNet is the perfect solution to the cybersecurity issues that individuals, families, and businesses face today. It not only connects every device using a secure, 24/7 always on, military grade VPN, but it also stops outside cyberthreats, malware and viruses as well. On SaferNet, all users are protected anywhere in the world, all the time, on any cellular or Wi-Fi network. In addition to SaferNet’s VPN and cyber protection, it also offers a range of employee or parental/family internet controls including internet filtering, monitoring, scheduling, and blocking access to websites or even entire website categories
Typically, a user would need 3 separate services for a VPN, Malware Protection, and Internet Controls; SaferNet offers all 3 features in one service. SaferNet truly is an endpoint security presence that can be implemented in minutes around the world, on phones, laptops, tablets, and computers at an economical price point that caters to all internet users. SaferNet guarantees a smooth setup and installation process that takes only minutes, and an easily accessible control hub for you to monitor all your employee’s or family members devices; including activity, time spent online, and threats blocked.