Classification of Tokens⁣

Today we will be looking at some of the broad classifications of Cryptocurrencies. It is difficult to classify token based on their application as several tokens have multiple applications embedded. Thus, we will try to make the criteria as broad as possible, so as to give you a reasonable understanding of the differences.⁣

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##1. Payment Tokens⁣
Payment Tokens are cryptocurrencies that have a sole purpose of transferring value from one wallet to another. The application of payment tokens may differ token to token, depending on why it was created. For instance, bitcoin was created to function as a medium of exchange that transcends barriers and intermediaries, while on the other hand, Monero was created with the same functions, but included an additional routing mechanism feature, safeguarding privacy. ⁣
Eg: Bitcoin, Monero, Zcash, Dash, Doge, etc.⁣

##2. Utility Tokens⁣
Utility tokens include a certain application attached to the payment mechanism. These tokens have additional applications value attached to them. It so happens that for the first time in recorded history, a payment mechanism has an embedded application onto itself, which has a ‘utility’ other than functioning as a medium of exchange. To give an example, The Golem project is a network built on the ethereum blockchain. It facilitates the trade of idle computation power in exchange for the native Golem Network Token (GNT). Thus the GNT has a utility, in this case facilitating the trade of computation. ⁣
Eg: Ether, Golem Network Token, Zilliqa, Storj, Tron, etc.⁣

##3. Security Tokens⁣
Tokens that represent an underlying physical asset usually fall under the category of security tokens. They can be compared to traditional instruments like stocks, bonds, etc., the only difference being that security tokens are built and issued on the blockchain. Security tokens haven’t gained enough traction when compared to other forms, but they hold huge future potential. With STOs (Security Token Offerings) beginning to gain notice, proper regulation could push security tokens to bigger adoption than the other one.⁣

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Hello @reverseacid I hope all is well for you..!!!

About this kind of tokens you right about everything in your explanation..

Each one has some special for investors or entrepreneurs, but we know that STOs goin to be better than others in the future. It guarantees security, transparency for all ...!!

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I find the security tokens to be a bit of an interesting dilemma at the moment... the "proof of ownership" really needs to be backed up by some sort of authority. However, if they do start to gain traction, they would seriously reduce the friction on financial settlements....

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Dear @bengy

Few days ago I also discovered so called "equity token". Do you know anything about that class of tokens?

Yours
Piotr

Partial ownership of real world assets? The only thing that I know is it is a way to 'share' in the investment of an asset like an artwork. It as a way for the creator to retain some financial value in their own work if it appreciates... There is the issue of requiring a binding contract though...

Thank you @bengy for being always so responsive.

Very clear explanation, great work!

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Dear @edgarare1, @reverseacid

Few days ago I also discovered so called "equity token". Do you guys know anything about that class of tokens?

Yours
Piotr

Hello my friend @crypto.piotr nice to hear from you...!!!

About “Equity Token” It is the first time I hear about it, don’t know anything about that kind of token, but sounds interesting to read a little and be more informative ..

I think this new token is more for companies and investors.. juste for the name “Equity token”

But I would like to find out a little bit ..!! Thanks a lot for the info my friend ...!!!

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Definitely a quick overview. Nice breakdown though. Especially for someone like me. I understand the basics, but beyond that I don't know why it almost like brain overload.

You were featured in week 55 of @pifc's Pay It Forward Curation Contest by @bengy. @pifc is a Pay It Forward Community which believes in by helping others grow we build a stronger community. We run this contest each week, it is open to everyone. It's a great way to show off people you find that might need some more exposure or meet new people.

Very informative article!
I'm here because @bengy featured you in the Pay it Forward Curation Contest. Keep up the great work!