What is a token?

Nowadays, bitcoin, Ethereum, cryptocurrencies and blockchain, to only mention those, are trending topics among the fintech industry.

If you have already heard one of all of those terms, you probably overheard the word “token” and wondered : What is it ?

Tokens are blockchain-based digital assets working as a digital coin. Simply put, a token is one unit of cryptocurrency. In fact, it is nothing more than a unit of value issued by a private entity. The difference between a token and a cryptocurrency stands in its application and in that way, tokens are differentiating themselves from traditional currencies as well as they are being used from bigger and wider purposes.

Even tough the Bitcoin is a cryptocurrency pioneer and is the cryptocurrency we speak the more of nowadays, most of the tokens that are being issued during ICOs are relying on the Ethereum cryptocurrency blockchain protocol because it has been judged safer for the user. It is also the case for the Myrillion token that follows the ERC20 protocol because by doing so, it is making the token compatible and adaptable to almost any exchange platform.

 

Having in mind these three words: blockchain, protocol, and token, let’s put it in context.

The blockchain technology is a little bit complex. Known as “the” new technology, blockchain acts like a nest. From this nest, the technology can be communicated in several ways using the “protocol,” which is a way of communication within the blockchain. The protocol that is followed can be based on ‘Ethereum’ or ‘Bitcoin’ technology for instance. The protocol will then define exactly how the communication should be made.

Nevertheless, tokens can hold various characteristics and we differentiate therefore, two different categories of tokens : Security and Utility.

Utility Token: The Myrillion token is a utility token! These type of tokens are usually used by a company to promote a product or a service. Without offering any shares, utility tokens are working as an access key or a coupon for further application within its system. Defining its terms, the company will choose precisely how and where this token can be applied and used, when the product, or service, will be entirely available (public).

 

Security Token: Unlike utility tokens, investors can expect a share or possessing reward for investing in a company/product. With a profit mindset, security tokens are translated into in the form of dividends or revenue share.

Leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.