What is the token cryptocurrency?

The token is a mandatory aspect of any ICO. If you are reading this, then most likely already familiar with this term. Just in case we recall that the ICO is a form of cryptocurrency crowdfunding. That is, attraction of investments for development of the project.

These projects receive funds in the form of exchange traded cryptocurrency – Ethereum or Bitcoin. Less to ICO accept other currencies. In return, the investor receives a certain “tokens”. They represent the internal asset ICO/project. Such an analogy of the shares of the company.
This page is dedicated to tokens bitcoin ICO: their function, shape, reasons for the appearance.

Digital tokens – what it is and why they are created

Formally, in a digital Glossary under the token means a device or array of characters used to identify users.

To some extent this “transcription” is relevant for ICO/cryptocurrency. The presence of certain tokens indicates a person belonging to the project is the proof of his participation in something.

Much more interesting is the functional description of the digital token. They can simultaneously represent the following and have the following characteristics:

  • To have purchasing power – they can buy services;
  • To perform the role of currency in a closed ecosystem;
  • To be a proportion of a shareholder in some “enterprise”;
  • A significant indicator of something (the number of available gigabytes to download);
  • A form of compensation for some action.

That is, the token can simultaneously be used as a tool of reward in a game, and also be a unit of account.

This is one of the fundamental differences between token and koina (coins, units of cryptocurrency). Cryptocurrency designed for payments and transactions. That is, its main function is the purchasing power. Tokens have a wider range of applications, but of smaller scale. In addition, they are used to obtain services and purchase of certain goods, tokens can also be the basis of the loyalty program or it can represent a digital campaign.

While cryptocurrency, so to speak, circulates “in the external digital economy”. Tokens, at least at the initial stage, support a closed ecosystem. They have no public wallet and the blockchain as the main cryptocurrency.

Imagine that a crypto coin is the U.S. dollar, the common and universal payment tool. And tokens, in turn, is a casino chips, subway tokens in the subway, skins in CS:GO, gift frequent flyer miles and so on.

However, once the ICO is over and the project to go public – token will be only one conversion from the status of “generally accepted and a universal payment instrument.” In this case, you can easily sell them for cryptocurrency. It’s like selling subway tokens for money.

The main stage of the ICO, the primary monetary deals, also called krautsalat or tokentalk (selling tokens). The first such event in the world of cryptocurrencies occurred at the turn of 2013-2014, when it was launched the first ICO in the history of Mastercoin (the current name – Omni). Further, the term token is “latched on” to the primary coin began its widespread use.

Here are some important features and facts about tokens:

  • Tokens became popular with the development of cryptocurrency market. If he continued to consist of only a few coins, then the need for additional digital assets would not be. The impetus for the promotion of the ICO and the token is associated with the creation of a platform with its Ethereum smart contracts;
  • Tokens “based” on different blockchains. In the initial stages they were in fact a fork of bitcoin, such as DogeCoin. Now based on the Ethereum blockchain and the source code of the platform ERC20;
  • There are a whole platform to release ICO. The most popular of them – Ethereum with multi-million audience. Other similar platforms: Waves, EOS, NEM, KickICO;
  • Buying tokens during ICO you acquire private keys. These contain information on the number of assets owned by you;
  • Tokens are the object of investment and tend to increase its value. Here again suitable analogy with the shares of the company or a start-up. Investors that have purchased the tokens, not only can use them in the internal ecosystem of the project, but also to receive their dividend;
  • Tokens really get free. Some projects give tokens just for signing up. Massively used Bounty is a reward participants who have contributed to the development of the project.

Principal tokens

Above, we noted that functions and features of a token are not limited only to the ability to buy something. Depending on the nature and purpose there are roughly three main types:

  • Appcon (application tokens);
  • Cumulative (loan) coin;
  • The tokens-the assets, i.e., stocks.


The lion’s share of all ICO-startups has a mobile platform or web functionality. The circulation of the token in such projects needed primarily for internal operations. That is, in this case ephiny is an internal means of payment.

For example, in the project TrafficX, which is a “cryptocurrency” analog Uber, tokens are used for travel. Platform for Dating MatchPool are reminiscent of Tinder or other Dating services. For coin (Gup) here bought premium status and extra features for your account.

In some projects, storage for tokens purchased additional space/gigabytes. In games like Augmenters, coin needed to buy armor and pumping their heroes. In this platform, as GameCredits tokens are used to pay for game developers and for purchases vnutriigrovoy items.