what token means

A token represents an asset, an asset, or an economic good. In contrast to coins, tokens do not have their own blockchain. However, they can be created on existing blockchains with relatively little effort. Tokens are often used like stocks or shares in a project. Therefore, they can serve as fuel for the network on the one hand, and as company shares or voting rights in the blockchain project on the other.

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Tokens are therefore fundamental building blocks for operations with crypto values. They serve as tools for the identification and authentication of users on a computer network. Only those who have a valid token are authorized to carry out a transaction on the associated blockchain. Payments on the Internet can be made very easily, quickly, and inexpensively.

Types of tokens

  • Utility token: Exchange or operating medium that guarantees certain functionalities, voting rights, or access. They must not create financial incentives for investors.
  • Equity tokens: company shares that you can acquire as an investor. For young entrepreneurs, in particular, are an alternative to the stock market to finance themselves. This form is currently not tradable on crypto exchanges.
  • Security Token: Hardware component for the identification and authentication of users. In order to additionally secure the authentication, a PIN or a password are used, for example. Security tokens may not be traded on crypto exchanges.
  • Asset tokens: Real economic goods that serve as security. Their value is firmly linked to real goods, such as real estate, precious metals, and other investments.
  • Payment/Currency Token: Currency tokens that are specifically used for financial transactions. They represent the currency unit of an independent cryptocurrency such as Bitcoin, Ripple, Ether & Co.

How can I purchase tokens?

Tokens are sold in Initial Coin Offerings or Token Sales. Only a certain number of tokens are offered for sale. The only type of token that can be purchased on crypto exchanges is utility tokens. They are tradable like cryptocurrencies and have their own price, which is determined by supply and demand.