Having the initiative to create a new token is an important first step, but before launching into its development, it is necessary to consider some details, such as the blockchain chosen to mint the digital asset or the type of token you want to create, since a cryptocurrency is only one of its many possibilities.
It is practically impossible to read an article or watch a video about cryptocurrencies, real estate investment or blockchain technology without mentioning the word token. Don’t worry if you don’t know where to start or if you are not very clear about the type of token you need, in this article we will explain what they are and how to develop yours. Will you join us?
What is a token and what is it for?
A token is a physical or digital object that acquires value in a certain context or for a community, although its own material state does not have that value. For example: casino chips in the context of gambling represent a certain monetary value, but in their material state they are just small colored discs made of metal or molded clay.
In the crypto universe, tokens are generated from pieces of programming code in the format of smart contracts that are developed on a blockchain. Those contracts are pieces of computer code that determine the rules of a crypto platform.
A token is a specific way of representing value on a blockchain. Some examples of tokens used today include utility tokens and security tokens, but they are not the only ones. Pay attention to the following lines!
Types of tokens you should know before you start their development
The novelty of the token lies in the fact that it uses blockchain technology to be exchanged as an asset of value with a high level of security, transparency, and speed. At this point, they can be classified into different categories, which we explain below:
1. Fungible tokens: They allow the exchange of goods, services, and store of value, can be divided into smaller units, and facilitate collective decision-making. Cryptocurrencies are a good example of this type of token. Fungibles, moreover, are the most like the money circulating in the cryptocurrency sector and can be divided into the following subcategories:
- Utility tokens. They provide future access to a product or service and serve to finance projects. An example is the decentralized lending sector, where protocols such as Compound allow the introduction of assets for collateralization.
- Security tokens. This is an investment medium that represents a stake in a company or asset. Some are exchangeable and can be traded on a stock exchange, but others are not exchangeable and are issued to finance specific projects. They are halfway between cryptocurrencies and shares in a company.
- Equity tokens. They represent a stake in the capital of a company. Equity tokens are issued in an ICO (initial coin offering) and can be used to buy shares in the company or to obtain a share in the company’s profits. The only present difference between an equity and a traditional share is the form of ownership registration. While in the former it is stored in a database, in the latter it is done in a blockchain.
- Governance tokens. Used to participate in the decision-making of a decentralized organization. Holders of these tokens can vote on changes to the platform, such as updating the software or allocating funds. The goal of governance tokens is to improve efficiency and transparency of decisions, as well as to reduce coordination costs. The LUNA token is a clear example.
2. Non-fungible tokens (NFT). They are cryptographic assets that represent real-world objects with unique and unrepeatable qualities in a blockchain through a smart contract and cannot be divided. We give as an example the representation of a unique painting. If someone wanted to have it, he would have to buy it, in case it is for sale. In this way it is possible to certify the originality and ownership of the asset.
However, the crypto world evolves tirelessly, so new disruptive functionalities are born every day, which you can discover weekly on Enkronos’ blog.
Developing a new token, the easy way
If you’re looking for a practical and secure way to create a new token, you’re in the right place. Here’s how to do it.
Suppose you want to develop an ERC20 or BEP20 token, popular in the blockchain world. On the one hand, ERC20 is a smart contract that has a pre-established data structure designed to facilitate the implementation of new functionalities on the Ethereum blockchain. On the other hand, BEP20 is a token standard that facilitates the implementation of digital tokens or coins on Binance Smart Chain.
Both work on top of the blockchains of other cryptocurrencies, and to create a token on them, you must first have programming skills, as well as understand the Solidity language. For this reason, it is always a good option to leave the development of the new token in the hands of specialists.
In short, tokens are developed in the crypto world through blockchain technology. They can be created, exchanged, stored, and transferred in a secure and transparent way thanks to the blockchain, but they can also be used to represent digital or physical assets, such as coins, property, or votes.
A cryptocurrency is a token, but a token is not necessarily a cryptocurrency. Currently, many people use token and cryptocurrency as synonyms, but they are not the same. The main difference is that cryptocurrencies have their own blockchain, while tokens are issued on another blockchain, such as Ethereum or Binance Smart Chain.
Remember that a cryptocurrency is just one among many token possibilities!
To conclude: creating a token quickly and securely
Would you like to create your new token in a few minutes on the Ethereum, Binance Smart Chain, xDAI or Ropsten blockchain? Ask all your questions on Enkronos and get the digital asset you have been dreaming of. Contact us today.