You must be hearing the word crypto token alongside cryptocurrency and many of you must have been confused between the two.
A lot of people have been intermingling the two concepts and more often than not people think they both are the same. People aren’t familiar with how they work, what they can do and how someone can profit off of them. To prevent yourself from losing your money, you need to understand what they really are.
We’re here to help you!
Crypto tokens started over Initial Coin Offering and don’t have a blockchain of their own. They have been pretty successful among investors and businesses, mostly because they are more similar to stocks than they are to cryptocurrency. They are tradable and work on the ‘supply and demand’ formula which means their value fluctuates more often. Another similarity is that they are available in a digital form and can be published on the crypto exchange if the developer decides to, just how stocks are up on the stock market. The availability of these tokens is growing as well and we can find tokens that fit our needs and decide accordingly.
They are special kind of virtual currency tokens that represent an asset or utility. For example, they can represent five hours of streaming content on a video-sharing blockchain or even represent other cryptocurrencies, like a Bitcoin token, can be equal to fifteen Bitcoins. These utilities can be traded among other users. You can even sell them to someone at a profit and they can also be bought.
So far so good? Now on to the good stuff.
It’s like a loyalty card which gives you some perks but the fun part is that you can sell and buy these perks from other people. These tokens run on the basic supply and demand principle, so you need to know its need and value in the market. The better you are at recognizing the need, the higher the price you can sell it for.
Before experimenting with this yet another mind-boggling internet creation, it is safe to start out by knowing what you’re getting into. A better idea is to purchase several types of tokens and see what suits you best. One great advantage of this is that you don’t have to be some savvy investor to get started. Some individuals have had success but it’s important to retain the information given above and play safe and small when starting out.
Each coin has its own token as well. Few coins include; Bitcoin, Ethereum, Ripple, Litecoin, Iota etc. And, some of the tokens are Augur, Tron, Bytom, Vechain etc. At the end of the day, both have their similarities but are fundamentally different from each other.
And, don’t worry you have got this.