Since Bitcoin's inception, thousands of new cryptocurrencies and tokens have emerged that function as digital currencies in blockchain ecosystems. They are designed to solve specific problems for people around the world. To distinguish between different types of digital coins, they have been categorized. One of the main functions of cryptocurrencies such as Bitcoin, Bitcoin Cash and Litecoin is to exchange/store value, as they mainly focus on developing a transaction layer. Tokens, on the other hand, are divided into 2 basic categories: security (replacing all kinds of securities) and utility (having a specific use). What are utility tokens? Currently, utility tokens are the most popular form of tokens. This is due to the massive wave of blockchain-based start-ups that have emerged over the past year. Many of these companies, enter the market through an initial public offering of their token (ICO), during which the community has the opportunity to purchase digital coins of the project and support its development. However, utility tokens serve a purpose other than just fundraising. Utility tokens are digital assets intended for spending within a specific blockchain ecosystem. For example, Filecoin uses its tokens to pay users who offer storage space. Civic, on the other hand, pays users to verify identities and create credentials on its blockchain. Tokens are also used to create unique loyalty programs that motivate users to take specific actions within the ecosystem. They are motivated because they know that the actions they perform will be compensated. Examples include tokens that encourage people to take care of the resources they use or at least at least monitor their consumption. Users can track and report the energy consumption of their devices through the IoT (Internet of Things) and receive tokens as a reward. What are security tokens? Many experts consider security tokens to be the key to global cryptocurrency adoption because they focus on tokenizing digital and non-digital assets. Thus, they can find application in almost any industry. A security token is essentially an investment contract that represents legal ownership (recognized by the SEC, among others) of a physical or digital asset (e.g., real estate, artwork or an ETF) that has been verified through blockchain. Investors can exchange fiat currencies or cryptocurrencies for security tokens using smart contracts. With this verifiable and legitimate ownership, security token holders can easily exchange their funds for other assets, use them as collateral for loans, or even split them up to hold in different digital wallets. The real value of security tokens is their ability to completely change the way asset ownership is defined. As a result, assets that have traditionally only been available to rich people in developed countries are becoming increasingly accessible to a wide range of people around the world Think of all the physical and digital assets in the world that have value (company equity, property rights, personal brands, etc.). We can see that all of these assets can be stockenized and sold as securities stored on blockchain. This shows that the possibilities of using security tokens are almost limitless. Advantages of utility tokens Utility tokens serve as a tool to drive human behavior through loyalty programs within the blockchain ecosystem. Their main advantage is to provide benefits to both the customer and the merchant. For example, we can buy some product or service using FIAT currencies or cryptocurrencies but by paying with the platform's utility token we get a discount. Another form of bonus to encourage the use of tokens can be access to unique features or participation in the decision-making process regarding the further development of the project. An interesting example is the Filecoin company. The company's product is access to decentralized storage space in the cloud. Filecoin uses unused disk space of computers, for which users pay with user tokens. Decentralized storage gives better protection against attacks that centralized databases are vulnerable to. Interestingly, Filecoin raised a record $257 million during its ICO by selling its tokens. Investors' confidence was inspired by the detailed whitepaper and the well-qualified team behind the project. Disadvantages of utility tokens The ease with which utility tokens can be created has led to significant regulatory challenges in the cryptocurrency industry. There are companies that fund their project through ICOs because they want to bring some value to the market. Unfortunately, in connection with public fundraising, there has also been a lot of fraud. There have been
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