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Know Your Tokens: 6 Token Types and Their Purposes 

Cryoto currency Tokens

Now that your toes are wet on cryptocurrency’s vast wilderness, it’s best to know what token types you are buying and what you can do with them. Nothing is more painful than buying tokens for a feature it doesn’t support.

This article lists some of the significant token types and their key features.

Payment Tokens

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Payment tokens are the most popular and widely known token type in the crypto space. Acting like real currency, these tokens are made to facilitate transactions on the blockchain and can be bought or sold for fiat currency. Bitcoin, the first crypto coin, is an example of a payment token.

Utility Tokens

Another common token type, utility tokens are mainly used as the preferred payment option within the developer’s platform. Platform users are encouraged to purchase the token to pay for products and services offered, making transactions easier to monitor and manage.

Security Tokens

Functions similar to traditional securities, security tokens are digital assets that represent a share or stock of a company or project. In addition to having a certain percentage on the project, this token gives holders specific rights that can influence its direction.

Since security tokens work like regular securities and stocks, these tokens are regulated by federal standards and stock trading guidelines. And while they have excellent safety features, their value is dependent on the project or company’s performance.

Another form of security token is the equity token. The Ijara token is a form of equity token where tokens are given to tenants for every payment made towards the home.

Reward Tokens

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Also known as reputation tokens, reward tokens are specialized assets given to members of a certain application on the blockchain. Requirements to receive this token may vary and usually has value within that application. Unfortunately, reward tokens have little to no value outside their dedicated application.

Asset Tokens

Unlike most purely digital tokens, asset tokens are grounded on tangible assets like real estate or gold. These tokens provide owners with a virtual asset representation that could be used for trading or investments. The ETHi token is an example of this token, as it is backed by lease-to-own real estate in the US.

Non-Fungible Tokens

One of the more famous token types, Non-Fungible Tokens or NFTs are a unique combination of art and cryptocurrency. Available in a wide variety of styles, ranging from trendy monkeys to digitized forms of classical art, these virtual assets see a steady increase in value due to their popularity.

Check out our article about NFTs to learn more.

Should You Catch Them All?

There you have six of the most common token varieties available in the crypto sphere. Remember to check for the token type before buying to ensure you’re getting the right one you need.

If you’re looking for asset tokens based on US real estate, EHTi has you covered. Visit us today to learn more about ETHi.

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