por A blockchain token is a digital asset that can be fungible or non-fungible and that represents value to a community. As blockchain technology advances, tokens are becoming an increasingly useful tool for the creation of financial securities, property tokenization, and digital art, among many other interesting applications.
What is a token in blockchain?
We can define what a token is in blockchain as a record on a blockchain that is used to represent something that has valuewhether it is a property, a work of art or a cryptocurrency. They are generated through a process called tokenization, which consists of creating a digital record on a blockchain that represents the value of the object being represented. There are different types and they have various applications in the real world.
Tokens on blockchain work like any other record on a blockchain. The difference is that instead of representing a transaction or a block, they represent a value. These tokens are transferable and can change hands without needing to go through an intermediary. Additionally, they can be programmed to comply with certain business rules, giving them greater ability to represent assets in the real world.
Types of tokens in blockchain
There are different types of tokens on the blockchain:
Fungible token: It can be exchanged for another token of equal value. For example, a cryptocurrency like Bitcoin is a fungible token.
Non-fungible token: It represents something unique and unrepeatable. For example, a digital artwork is a non-fungible token, as it cannot be exchanged for any other digital artwork.
Utility token: It is used to access a specific platform or service. For example, utility tokens can be used to access e-commerce platforms or social networks.
Community token: It is used to fund specific projects and obtain rewards related to those projects. For example, community tokens can be used to fund projects related to medical research or other social projects.
Security token: represents an investment in a specific company or project. For example, a startup You can issue security tokens to fund your project and offer investors a financial return.
Asset Token: represents ownership of a physical asset. For example, a property token can be used to represent a property or a parcel of land.
Create a token on the blockchain
Tokens are created through a blockchain. The steps to create them include defining the token, creating a smart contract, and issuing the token.
Create tokens on a blockchain
Creating tokens on a blockchain can be done by using blockchain development platforms such as Truffle Suite or Remix IDE. To create a token, you must first define its symbolism, contract code, and token specificities, such as the total number of tokens. Next, a smart contract must be created.
Create tokens with smart contracts
A smart contract is used to issue the tokens on the blockchain. The smart contracts They are computer programs designed to automate the execution of contracts. Once the smart contract is created, the tokens can be issued on the blockchain.
Ethereum is a popular platform for token creation as it uses smart contracts on your blockchain. The tokens created on this platform are known as ERC-20, a recognized standard for the creation of tokens on the Ethereum blockchain.
Differences between tokens and cryptocurrencies
Although tokens are a type of cryptocurrency, it is important to highlight the differences between the two. Remember that all cryptocurrencies are tokens, but not all tokens are cryptocurrencies.
Cryptocurrencies are a form of digital currency that functions as a medium of exchange and uses cryptography to secure and verify transactions, as well as to control the creation of new units. Instead, tokens are digital assets issued by a private entity that can represent any tradable and fungible asset.
Some examples of cryptocurrencies are Bitcoin, Litecoin, Ripple and Ethereum. These cryptocurrencies are used mainly as a means of exchange and are quoted in different markets.
Tokens are used in numerous real-world applications, such as the tokenization of traditional assets such as property, artwork, and financial securities. On the other hand, cryptocurrencies are usually used as a means of virtual exchange or as a store of value.
Applications of tokens in the real world
Token types on blockchain have numerous real-world applications, providing innovative solutions for industries such as real estate, art, and finance.
Property tokens: They are an efficient and safe way to invest in real estate. Investors can purchase tokens that represent a portion of a property and receive a proportional share of the rental income and profit from the sale. They also allow owners to split up and sell their property to investors, diversifying their portfolio without having to sell the entire property.
Digital Art Tokens: They allow artists to sell their artwork in digital format through blockchain. Each token represents a unique work of art, ensuring authenticity and allowing buyers to own an exclusive digital work of art. They are easier to store and transfer than physical works, which simplifies the logistics of buying and selling.
Tokenization of financial securities: allows the creation of digital financial assets such as stocks, bonds and other financial instruments. They provide investors with an easy and secure way to own and trade financial assets as transactions are made through the blockchain, reducing costs and the need for intermediaries.
Keep training in blockchain
Now that you know what a blockchain token is, you can continue learning about this technology thanks to the Blockchain and Cryptoassets Full Stack Bootcamp. In a few months, you will acquire all the knowledge and skills you need, both theoretical and practical, to become an expert. Access now and request more information to discover how to change your future!