What are «tokens»? In French, numerical tokens? What are they used for and what do they represent?
In the sphere of the crypto-economy, there are more than 6,000 crypto-assets. Some are «coins» (digital pieces), others are «tokens» (digital tokens). There are also «stable coins» (stable digital pieces). But what is a cryptocurrency?
There are so many different terms... We are going to summarize them!
There are two main categories of assets: coins and digital tokens.
The «corners» (parts digital)
Digital coins are digital units used as a native currency in their own blockchain. The digital coin Bitcoin works on the Bitcoin blockchain, the digital coin Ether works on the Ethereum blockchain. Digital coins are used as a currency (known as cryptocurrency) because they are intended to be used solely according to these three characteristics:
–> For value transfer (sending and receiving peer-to-peer money).
–> As a store of value (preserving value for later use).
–> As a unit of account (you can associate the price of a good or service with this digital coin).
It is used in exactly the same way as the fiat money we already know: euros (€), US dollars ($), etc. To date, there are about 1,000 different coins.
The tokens (digital tokens):
Digital tokens are digital units used for the functionalities of an application for which they were designed. These digital tokens do not have their own blockchain; they are coded on a parent blockchain that hosts them. Very often they are hosted on the Ethereum blockchain and are called: ERC-20 token.
For example: the OCEAN token is designed by the Ocean Protocol project, which makes it possible to open a data marketplace in a completely private, secure, and reliable way. There are many tokens used for decentralized projects.
Token creation is easier and faster because it only requires using an already existing parent blockchain. Each token is used in the economy of the project to which it is native; it has no utility outside the project. For example, currencies in video games allow players to buy armor and upgrades, but they only have value within the video game in question. To date, there are around 5,000 different tokens, all associated with a project.
Once we understood what the two main families of crypto-assets were, we are going to talk about a slightly more special asset.
They are part of the token family, but they are loosely referred to as «stablecoins». These are tokens specially created for the purpose of representing the value of a fiat currency (euro, dollar). This means that 1 token (USDT for example) has the value of 1 dollar. Stablecoins make it possible to send value backed by the dollar across the world very quickly and for negligible fees.
In the upcoming articles, we will discuss the different types of tokens that exist. We will go into more detail. Feel free to ask your questions.
