What is a Token and what is it used for ?
A token is a digital asset that cannot be copied and can be traded on one or more blockchains. Tokens are absolutely necessary to interfere on the blockchain, on decentralized finance platforms (DeFi) and on some applications (dApps).
Why do we use tokens ?
Tokens have made the digitization of value on the Internet possible. They are backed by one or more blockchains, which allows them to be exchanged without fear of duplication, thus giving them a real value.
This unit of value can be of several kinds :
- property right
- power to vote
During a transaction, a token is exchanged in a few minutes between an issuer and a receiver. The preservation and security of the transaction is ensured by the blockchain, which acts as an account book.
Do not confuse a ” coin ” and a ” token “
In the crypto world, a “token” is a generic term. It can refer to both a crypto-currency such as Bitcoin or Ether, but also to a digital asset created on one of the various existing blockchains.
A “coin” is the native token of a blockchain. It is essential to its operation, especially to pay the transaction fees, also called gas fees. The best known coins are bitcoin, which is used for transactions on the Bitcoin blockchain, ether for the Ethereum blockchain, SOL for the Solana blockchain, etc.
Coins can be mined, not tokens.
What are the other types of token in the crypto universe ?
There are several types of tokens, each with its own characteristics and specific use :
- Utility tokens
- Security tokens
- Non Fongible Tokens (NFTs)
- Soulbound Tokens (SBTs)
Utility tokens are by far the most common tokens in the crypto ecosystem. They are used to buy goods or services on exchanges or decentralized platforms. They are generally used as currency on the said platform.
A security token is a digital token that represents (but does not guarantee) an ownership stake in a company or organization. Typically, it gives holders ownership or voting rights and sometimes allows them to receive dividends.
Thus, security tokens allow the tokenization of real assets such as real estate for example. This is what the company RealT offers.
A security token is not a share and offers no guarantee.
Non Fungible Token (NFT)
Non-fungible tokens are unique and easily identifiable tokens. A 2€ coin is said to be fungible, because it is the same as your neighbor’s. If you give him your 2€ coin and you get his, you still have 2€. If you give him your 2€ coin and you get his back, you still have 2€. This coin and its value are interchangeable.
On the contrary, NFTs have a unique value. Since they are stored on the blockchain, it is very easy to verify their authenticity in a transparent and secure way. By acquiring an NFT you ensure its possession. These are widely used in the field of digital art, ticketing, degree certification, etc.
NFTs can be traded on specialized Internet sites or on certain auction sites.
Soulbound Token (SBT)
Soulbound Tokens or SBTs are non-transferable, publicly visible NFTs that represent unique qualifications or commitments of a user. They are associated with an individual and cannot be traded or sold.
It is easy to imagine that the latter can be extremely useful in the case of a digital identity, a family booklet, diplomas, etc.
SBTs are still in development as they were dreamed up in 2022 by the co-founder of the Ethereum blockchain, Vitalik Buterin.
How and where to get tokens ?
Although there are many ways to get tokens, the easiest way is certainly through exchange platforms like Binance,
You can also choose to mine certain tokens or to be a validator node. By participating in securing the blockchain and maintaining the network, you will be rewarded with crypto from the blockchain in question. or Coinbase.
Another way to get tokens is to go through launchpads and participate in ICOs (Initial Coin Offering), IDOs (Initial Dex Offering) or IEOs (Initial Exchange Offering).
Be active and attentive to social networks because, with a little luck, you could be eligible for possible airdrop !
Which token to choose in 2023 ?
Besides Bitcoin, which remains the mother of all crypto-currencies, here are 3 assets we recommend you follow this year :
Native token of the second blockchain of the market, the Ether remains a sure value to possess in portfolio. The craze and the development of the blockchain is still going strong and it doesn’t seem to stop !
Ethereum is the crypto project that evolved the market with the arrival of smarts contracts and continues to be the basis for the development of many projects.
Often presented as the Internet of blockchain, the Cosmos ecosystem is extremely interesting. Indeed, the idea of the project is to build an interoperable decentralized blockchain system in order to unite many independent blockchains.
In the coming years, the Cosmos universe should enable a whole new set of applications within the ecosystem.
Polygon proposes to solve one of the biggest problems of the Ethereum blockchain at the moment, its scalability. Including the ZK Rollup technology, this Layer 2 seems to have a lot more to offer.
The Polygon Foundation has established valuable partnerships with internationally renowned companies such as Disney and Mercedes-Benz.
Why and how to create your own crypto token ?
The reasons for wanting to create a token are multiple and can vary considerably depending on the context and the objective sought.
Many times, companies or organizations looking to launch their own tokens do so with the goal of funding a project through an ICO. This can also be very useful for representing property or assets, such as company shares or real estate.
As for how to create your token, there are also many possibilities. Beware, it is important to note that this requires knowledge of programming and blockchain technology. If you are not comfortable with these subjects, you will have to call a developer or a specialized company.
First, define the purpose of your token and determine how it will be used (Is it an NFT, a utility token, etc.). Next, choose a blockchain on which to deploy your token. There are many, each with its own advantages and disadvantages, so choose the one that best suits your needs.
It’s time to code your token ! You will need to use the programming language specific to the blockchain in question (Solidity for Ethereum, Rust for Solana, etc.). Once finished, you can launch your token. This can be done using a specific deployment tool or in command line.
Make sure you meet the standards and requirements of the blockchain you are developing on.
Now it’s time to promote your new token to attract users and investors. The best way to do this is to use social networks, online forums, specialized media or any other communication channel you deem relevant.