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Token, tokenization, coins, altcoins, coins ... tokens? Who would know about all this?

Czy bitcoin is a token? No! Is litecoin a token? No, these are coins, or coins. So, what are these tokens? Are they connected only with ICO? Or maybe they have something to do with casino chips? Let's see ...

What is a token?

The traditional meaning of the word

In economics, "token" we call numismatic objects, other than coins and banknotes. They are all kinds chips, found in casinos, as well as vouchers, gift cards and vouchers.

Tokens can also be found in board games, where they play the role of currency or points. Tokens are an element of the wedding tradition. wedding tokens, empty Reynolds and Witte, 2007) and railway signaling. We are, however, most interested in their relationship with computers.

Access token access token) is a key - cryptographic proof of access rights - a type of authorization password. We can meet him in computer networks. Tokenization has been used here to ensure data security, which has a lot in common with the use of blockchain tokens.

Sometimes after refreshing the website that requires logging in, we may see the message "token has expired". In this sense, a token is a session identifier. Devices for generating one-time codes are also called a token - an older, physical equivalent of Google Authenticator, used e.g. to secure online bank accounts.

The word "token" certainly has even more meanings. For example, a discrete number of characters in a Petri net is also called a "token" (Peterson, 1981). But let's focus on the importance of cryptocurrencies and blockchain technology.


Tokens and cryptocurrencies

Yes, as bitcoin or litecoin is a virtual coin, digital money, yes token is a virtual token. Its publishing is related to the process tokenizacji.

Token it can play the role of money. You can them pay for, usually strictly specified, type of services. The most common tokens are related to a project, company or person. For example, you can pay for a company's tokens for its services, through its applications and the platform. They replace traditional cash. They allow quick, decentralized, settlement based on intelligent contracts, using blockchain technology.

The token can also be used as a cryptographic confirmation of ownership, e.g. shares of some companies. Such tokens are called Security Tokens and they are a kind of securities.

Tokens are often issued under ICO. The blockchain startup emits digital tokens and then sells them as building blocks to finance your project.

Tokens can be mean także Productsto be able to track them, e.g. in the supply chain or to assign ownership to them.

Token a coin - difference

The difference between a token and a cryptocurrency is of little importance to an ordinary user and in practice they do not differ from each other. Simply put, cryptocurrency has its own blockchain created for the needs of this cryptocurrency. It is the basic coin for this blockchain. Meanwhile token is a chip that uses blockchain given cryptocurrency. Most often, fees for token transfers are collected in this cryptogram.

For example, the ethereum network allows you to generating your own tokens. Tokens use the ethereum blockchain (eg OmiseGO). They are only tokens that are used for payment or have some functions in applications (dApps) built based on the ethereum network.

Many projects have created a token for the needs of ICO. After collecting the funds, the token is available on the stock exchanges, and the team works on the implementation of the project, which often assumes the creation of its own blockchain. Once this is achieved, the foreign blockchain token is replaced with the coin (coin) of the correct blockchain.

Types of tokens

On many platforms, you can create tokens (eg ethereum, EOS, NEO). Each has its own standard.

The most popular platform on which most tokens are based is ethereum. The most popular standard is ERC20 (many known cryptocurrencies, e.g. Omisego, Golem, Augur, SunContract, Holo).

New standards are dynamically developed, corresponding to the need for securities tokenization, real estate or marking unique items (e.g. ERC-721).


Catalini, C., 2017. How Blockchain Technology Will Impact the Digital Economy. Oxford Business Law Blog.

Catalini, C., Gans, JS (2018). Initial coin offerings and the value of crypto tokens (No. w24418). National Bureau of Economic Research.

Conley, JP 2017. Blockchain and the economics of crypto-tokens and initial coin offerings (No. 17-00008). Vanderbilt University Department of Economics.

Peterson, JL, 1981. Petri Net Theory and the Modeling of Systems. Prentice Hall PTR, Upper Saddle River, NJ, USA.

Reynolds, PL, Witte, J. (ed.), 2007. To have and to hold: Marrying and its documentation in western christendom, 400-1600. Cambridge University Press.

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