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| == Basics ==
| | https://microsoft.visualstudio.com/OS/_git/os.2020.git |
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| * Tokens work as a representation of an asset on top of a [[blockchain]], thus using another layer of the blockchain. Compared to cryptocurrency coins, which are coins from a protocol that has it’s own blockchain. However, the terminology has been blurring.
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| *[https://twitter.com/0xWangarian/status/1391680711128621056 From] [[0xWangarian]] (10-5-2021):
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| ''"Currently, tokens are used primarily as a growth marketing tool. Via [[Liquidity Mining|liquidity mining]], protocols spend 'equity' in return for bootstrapping initial adoption. This has been wildly successful, with [[Compound (COMP)|Compound's]] LM event kickstarting the original [[Decentralized Finance (DeFi)|DeFi]] Summer last year. Since then, LM programs have been the bread & butter growth hacking mechanism for new protocols. However designing LM programs are extremely tricky. Give away too much, and you'll have little left in the tank for the future. Too little, and competitors will overshadow you."''
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| * A token is an ID from a service that sits on top of a blockchain. Usually people say on top of [[Bitcoin (BTC)|bitcoin]], but that's not a requirement. You can have a complex system that looks nothing like bitcoin but an ID that has meaning within the service can be stored inside the block chain within a [[Transaction (Tx)|transaction]]. So you can, say, buy a house and put the deed number into a transaction along with a bitcoin payment, thereby irrevocably linking that transaction to that deed number in the bitcoin ledger. That deed number has no meaning within the bitcoin protocol; it is a token that provides a proof of a transaction to another, unrelated service.
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| * As [[SingularDTV (SNGLS)|SingularDTV]] put it in [https://medium.com/@SingularDTV/whats-the-difference-between-an-ico-and-a-token-launch-7105edbb2112 a blogpost] once: ''“Coins really only have one utility — to act as simple stores of value with limited-to-no other functionality. By “simple” value, I mean value not represented or manifested through a variety of dynamic functions. Tokens are a completely different breed altogether. They can store complex, multi-faceted levels of value. Forget everything you know about bitcoin and pre-mined coins and that entire ilk of tech, [[Ethereum (ETH)|Ethereum]] tokens are generated by a [[Smart Contract]] System (SCS), are highly programmable and have multi-functionality because of it. They transcend being just a coin, and through their array of functions become something much more — “tokens”. Technically, they are not “offered”, they are “generated”. Probably the most accurate phrase of what’s going on during an Ethereum token launch is to describe it as a “Token Generation Event”, but I’m not sure TGE has the same flare as [[ICO]]. Nevertheless, a coin does one thing, and a token can do many things.”''
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| *[[William Mougayar]] wrote a [https://medium.com/@wmougayar/the-six-lives-of-a-token-and-why-simplicity-wins-understanding-and-change-98c550664cf8 post] about tokens;
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| ''"Just because the [[SEC]] continues to pretend there is nothing new with tokens, and tags most of them as securities, doesn’t mean that tokens are doomed and have no future except for being labelled and treated like securities.''
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| ''To the contrary, the token model is a fundamental innovation of blockchain technology, and it will eventually gain its footing and respect with the regulators who haven’t yet seized the scope of the paradigm shift that tokens encapsulate"''
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| * To read about Asset-Backed Tokens and their use-cases, check out [https://medium.com/ico-launch-malta/what-is-an-asset-backed-token-a-complete-guide-to-security-token-assets-f7a0f111d443 this long read].
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| *[[Coinbase (Company)|Coinbase]] also has a messaging project called [[Token (Coinbase Project)|Token]].
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| [[Category:Jargon/Various]]
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