The Different Kinds Of Crypto Tokens
According to our previous article on the Notable Differences Between Coins Vs Tokens, crypto tokens are digital assets that run on existing blockchains. Like cryptocurrencies, crypto tokens can be used as units of value. However, many were designed to serve more purposes beyond what they were created for originally.
Examples of crypto tokens include non-fungible tokens, utility tokens, governance tokens, fan tokens, and security tokens. Let’s take a closer look at the new types of tokens shaping today’s crypto landscape.
Key Takeaways
• Among the numerous tokens in the crypto space, NFTs still dominate discussions and offers promising rewards for investors.
• NFTs cannot be replicated but holds value in their original form.
• Binance coin still stands as the most valuable utility token currently.
• Many blockchain-based companies offer security tokens to interested investors.
• Fan tokens are a new type of token that endears fan support.
SEE ALSO: Cryptocurrency Coin and Token: What is the Difference?
SEE ALSO: Are NFTs a True Store of Value?
Non-Fungible Tokens
Among the many types of crypto tokens, non-fungible tokens have gained the most publicity. What sets NFTs apart is that they cannot be replicated or divided into smaller parts.
Unlike cryptocurrencies and other crypto tokens, whose units are interchangeable. Their non-fungible properties have made them the ideal vehicle for digitally representing ownership of assets.
Each NFT contains a unique digital signature that proves asset ownership. After exploding into popularity in 2021, NFTs have revolutionized the digital art trade, helping artists generate more profits from online art sales.
Utility Tokens
Utility tokens give holders access to exclusive services within a blockchain-based ecosystem. One of the most established utility tokens today is the Binance Coin, the native utility token of the popular crypto trading platform Binance.
Buying Binance Coin lets users save on transaction fees when trading cryptocurrency on Binance. Binance Coins can also be bought and sold for profit.
There are also many different subsets of utility tokens. The most well-known are governance tokens and fan tokens.
Governance Tokens
Governance tokens are used to award holders voting rights within decentralized exchanges. Today, one of the most well-known governance tokens is UNI, the designated token of the Uniswap exchange.
Users can trade UNI tokens to gain voting rights on community decisions. With voting rights, users can have a say in how the Uniswap Protocol is run.
Fan Tokens
Fan tokens are a kind of crypto token designed to help fans find new ways to support their favorite sports teams or entertain1ment groups.
Sports teams that use fan tokens Include Paris Saint Germain, FC Barcelona, and Manchester City. Fan tokens are similar to governance tokens in that they award holders voting rights on organization decisions.
However, unlike governance tokens, fan tokens are exclusively used by fan organizations. Additionally, fan tokens give fans access to other VIP rewards, such as exclusive promotions, games, and superfan recognition.
Security Tokens
As crypto publication Decrypt.Co explains security tokens are crypto tokens that represent securities, such as shares of real estate or companies. Companies that use blockchain technology usually offer security tokens as a way of letting people invest in their growth.
Users that buy security tokens from a company essentially become shareholders, which allows them to have a say in company decisions, depending on the size of their investment. Security tokens are often also called equity tokens because they operate similarly to stocks.
Final Thoughts
Today, crypto-assets can be used for more than just currency. They can also give you access to certain privileges.
NFTs let you trade unique assets, utility tokens let you access exclusive services, and security tokens award your shareholder rights. For those that want to enter the growing world of crypto, the options are endless.
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