Crypto tokens are a kind of digital currency tokens that are used to perform transactions on digital platforms like blockchain networks. They can also be owned as an asset or a utility.
Types of Crypto tokens
Usage Tokens: Usage tokens are the tokens that are required to use services. The Ownership of these usage tokens does not give you any specialized rights within the network but gives access to the services you need that are on the network. Scarce tokens, when combined with a useful service, can create massive value for token holders and entrepreneurs.
Work Tokens: Work tokens are the tokens which give users the right to contribute work to a decentralized network or for the distributed autonomous organizations (DAO), being the backstop in a collateralized debt system or securing the network
Intrinsic, Native or Built-in tokens: These are the tokens that are built in in a blockchain network like bitcoin or ethereum that serve as block validation incentives and transaction spam prevention.
Application Tokens: Application tokens are the tokens which can be easily issued on the application layer on the network through the smart contracts on the blockchain network. These tokens are mainly used on the Ethereum blockchain network.
Asset-backed tokens: Asset-backed tokens are the crypto tokens that act as the digital equivalents of the physical assets. They are claims on an underlying asset like gold or property that are issued by a party onto the blockchain network for later redemption, that can be claimed by the specific issuer who has or issues the requested asset.
Uses of Crypto tokens
- To indicate the ownership of a token.
- Vouchers that can be redeemed for commodities like food, clothes, etc at places where the sale of digital goods is allowed.
- To purchase software licenses.
- To maintain stock certificates.
- To rent cars and other appliances or things.
- To buy tickets or access passes for entertainment shows.
- To redeem fees for automated road and bridge tolls.
- To access online storage items like lockers etc.
- For playing online games.
- For paying for online subscriptions and memberships for sites.
- For buying and selling bonds.
- Crypto tokens can be also used as a system of voting.
The assets that can be represented by the crypto tokens are as follows
- Worth of energy like solar power in hours.
- Currencies like dollar, rupee, Euro etc.
- Product from a crowdfunding project
Songs or entertainment that is yet to be released in the future.
- Insurance policies.
- Commodities like entrance tickets to shows, gift cards, vouchers for restaurants, food coupons, etc.