Do utility tokens have a value?

Financial lexicon

A Token (English: sign, mark, coin) represents one asset, Asset or a Economic good. In contrast to coins, tokens do not have their own blockchain. However, they can be created on existing blockchains with relatively little effort. Tokens are often used like stocks or shares in a project. Therefore, on the one hand, they can be called Fuel for the network, on the other hand as Company shares or Voting rights serve in the blockchain project.

Tokens are therefore basic building blocks for Operations with crypto assets. They serve as tools for the identification and authentication of users on a computer network. Only those who have a valid token are authorized to carry out a transaction on the associated blockchain. Payments on the Internet can thus be carried out very easily, quickly and inexpensively.

Types of tokens

  • Utility token: Means of exchange or equipment that guarantees certain functionalities, voting rights or access. They must not create financial incentives for investors.
  • Equity token: Company shares that you can acquire as an investor. For young entrepreneurs in particular, they are an alternative to the stock market to finance themselves. This form is currently not tradable on crypto exchanges.
  • Security token: Hardware component for the identification and authentication of users. In order to additionally secure the authentication, a PIN or a password are used, for example. Security tokens may not be traded on crypto exchanges.
  • Asset token: Real economic goods that serve as security. Their value is firmly linked to real goods, such as real estate, precious metals and other investments.
  • Payment / Currency Token: Currency tokens specifically used for financial transactions. They represent the currency unit of an independent crypto currency such as Bitcoin, Ripple, Ether & Co.

How can I purchase tokens?

Tokens are sold in Initial Coin Offerings or token sales. Only a certain number of tokens are offered for sale. The only type of token you can also get on Crypto exchanges are utility tokens. They can be traded like cryptocurrencies and have their own price, which is determined by supply and demand.

¬ęBack to financial lexicon