What is a Crypto Token and what are the Different Types of Tokens
Crypto has been making its presence felt for more than a while now. It all started with the release of Bitcoin with the transactions taking place on a blockchain. Of course, no innovation comes alone, and this case was no exception.
New crypto coins were developed and called altcoins. Then came Ethereum that brought the term token into the picture. These crypto coins have the same goal — to replace fiat currency.
New crypto exchanges were established to allow users to trade the coins and tokens with other users. The crypto market runs similar to the stock market though it is much more volatile in nature. With the success of crypto coins, multinational organizations and young entrepreneurs are busy with crypto coin development. Businesses are launching new crypto coins that can be traded on crypto exchanges.
Let us see a little more about the different types of crypto coins.
Types of Crypto Coins
As we mentioned above, there are three basic types of crypto coins-
- Bitcoin– it is the first crypto coin in the market Built on Bitcoin blockchain.
- Altcoins– these are created as an alternative to Bitcoin and are traded similarly. Ex: Ripple, Tether, etc.
- Tokens– these are built on existing blockchains and don’t have one of their own. Ex: Ethereum.
Types of Tokens
Tokens are created in a limited number and are distributed through Initial Coin Offerings (ICO) and Security Token Offerings (STO). Token development was first started by Ethereum. There are currently more than 20,000 tokens that can be traded on the Ethereum blockchain (ERC-20).
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Tokens are further classified into different types based on the purpose they serve.
- Security Tokens
These are nothing but securities offered by a business. The value of security tokens is dependent on the performance of the business. When you develop security tokens, you have to adhere to the federal laws of stock trading. Security tokens are an easy, effective, and secure way to raise funds for your business.
- Utility Tokens
These tokens are used as a payment method to buy a product or a service that has been created on the same blockchain. You don’t have to build the tokens from scratch on your own. By leveraging coin development services, you can develop a utility token and share them with investors through ICO. The investors can then use these tokens on your blockchain. This is another way to bring investors to the business and facilitate them to have transactions with each other on the blockchain.
- Asset Tokens
As the name suggests, asset tokens represent a digital representation of a physical/real asset. These allow investors to trade real assets on the blockchain. The value of the asset token depends on the value of the asset it is linked with. You can develop asset tokens to be traded on your crypto derivates exchange.
- Reward Tokens
Reward tokens are reward points you offer to your customers. They can trade these tokens on your crypto exchange and buy cryptocurrency in return. The value of a reward token is less than the value of other tokens. You develop and distribute reward tokens to show your appreciation to your customers.
- Currency Tokens
Bitcoin is the best example of currency tokens. When you hire token development services to develop a cryptocurrency, you are creating a token that can be used as a digital currency. These tokens can be used for buying products, paying bills, and also for trading. Your currency token can also be traded on other exchanges and can be converted to fiat currencies.
Token Development by Blockchain Development Company
It is important to decide which type of token you want to introduce into the market before you go ahead with the rest of the details. Releasing a crypto token is not an independent task. You will need to decide the type of blockchain, the exchange, and then take the necessary permissions from the government and authorities in the region.
It includes various processes such as developing a wallet to store the new tokens, writing smart contracts for the tokens, and creating a white paper to share with prospective investors. All this and more can be handled by an experienced coin development company.
At Antier, we offer complete token development services — from token conceptualization and token development to white paper creation and marketing.
Connect with our subject matter experts to share your needs for token development.