Crypto Tokens represent a specific Value
Each cryptocurrency token embodies a tradable good. This can be for example coins, points, certificates, in-game items etc. This means that crypto tokens can be used to represent a share in a company or can be used as central committee voting rights.
They are often used to raise funds in a crowdsale. That is why many people refer to them as cryptocurrency assets or crypto assets and crypto equity.
Creation of Crypto Tokens
Crypto Tokens are created over an Initial Coin Offering (ICO). Even though the wording of “coin” is false, that is what is currently used. Those created cryptocurrency tokens don’t have their own blockchain.
As of writing this article, most ICOs use the Ethereum blockchain, which enables a storage in an Ethereum wallet.
Diffenrece between Coin, Token and Cryptocurrency
A coin has its own blockchain. There is no difference between a coin and a cryptocurrency. Examples are Bitcoin, Ethereum Coin.
A Token is hosted on another currency’s blockchain. Example: FirstBlood Token.
Crypto Tokens on Exchanges
The developers of a specific digital token can decide to publish their token on a cryptocurrency exchange. This way users are able to buy and sell the token the initial coin offering has finished.
Always check if further crypto tokens are going to be minable and if more coins are going to get created past the ICO. Else one doesn’t know if the inflation rate might be too high for the value of the coin to increase.
Freezing of digital currencies
Tokens created by the Ethereum Code have the ability to get frozen in case something happens – a hack or a government regulation. This means that no cryptocurrency tokens are going to be moved until the unfreezing happens.
Did we miss something? Or do you have any open questions on crypto assets? Then please leave us a comment in the section below!
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