Tokens are often mentioned when talking about cryptocurrencies or crypto networks. Do you want to know what they are and what they are used for?
It is practically impossible to read an article or watch a video about cryptocurrencies without the word meme token being mentioned. So, without hesitation, in this article, we want to explain what they are, how they are used and what they are for.
What is a Token
A token is a physical or digital object that has value in a certain context or for a certain community, even though its own materiality does not contain that value itself.
Casino chips, for example, are just pieces of plastic in different colours, but they represent amounts of money. Some are really expensive and some are just so cheap that you can buy them in millions in a small amount of money.
That’s what tokens do: they represent something else, they are in their place. Why? There are many reasons: convenience, security, ease of transport or transfer.
Tokens and Cryptocurrencies
Immediately after the creation of Bitcoin in 2009, many other enthusiasts of digital security, new economies and technological developments launched their own.
One of them was Ethereum, created by the young Russian programmer Vitalik Buterin, a network that, among other things, allows different people, organizations or companies to create their own cryptocurrencies, their own tokens, their own ways of measuring value in a crypto project. It was only then that the token became a popular concept in the crypto world.
Currently, token or meme token and cryptocurrency are used as synonyms. In short, ETH is the Ethereum token, BTC is Bitcoin, and DAI is MakerDAO. However, the distinction points out that cryptocurrencies have their own blockchain, while meme tokens are issued on another blockchain, such as Ethereum.
Also, keep in mind that there are other types of crypto meme tokens that are not cryptocurrencies. The most obvious example is NFTs, literally “non-fungible tokens”, a format that allows you to get anything from collectables to digital art to video game characters.
Types of Tokens
Currency Tokens
They are what we call cryptocurrency. Bitcoins today can be used for any everyday transaction, as a replacement for traditional money. Today you can buy plane tickets, and sneakers, pay subscriptions to online services and, in some states, you can even pay taxes.
Utility Token
They are the unit of account of a crypto project or community, that is, the symbol used to measure an amount of a certain asset. These tokens are not designed as an investment, beyond the fact that the rise in their demand and a limitation in their number can trigger the price of some. Rather, they function as a gateway to certain services.
Also Read About: What is HOKK Finance?
Community Token
These tokens are an alternative within the utility tokens focused on the idea of community, around some groups such as the participants of a play-to-earn game, a metaverse experience, or the community of users of a crypto platform. These types of tokens sometimes also include meme tokens that are based on famous internet memes. In general, they provide access to certain benefits, which can range from discounts and rewards to special features or access to communication channels of that community in Discord, Slack or Telegram, for example.
Security Token
They work like an investment contract, and those who buy them do so expecting a current (in the form of dividends from a company) or future gain. They serve as collateral of ownership of a portion of the issued digital asset, and gain and lose value according to their price fluctuations. They can also function as actions. They are instruments designed to obtain financial gain and for this reason, they are usually subject to stricter regulations.
When you decide which crypto you want to buy, our platform will ask you to enter the desired amount and to accept the conditions of the purchase, such as commissions or minimums to operate. After confirming the transaction, your first cryptocurrencies will be credited to you within a few minutes.
