What are Crypto Tokens?

crypto tokens
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    Crypto tokens, it takes a significant amount of time, effort, and resources to build a strong blockchain. The code must be error-free, and a large network of miners is required to make this happen. To name but a few examples.

    Developers of Decentralised Applications (dApps) overcome the need to do this by creating their own unit of value (token). These crypto tokens can use the features of the underlying blockchain without having to develop their own network. This allows the token to have its own unique coding that is required by the developer, while retaining the security of the underlying network.

    What are Crypto Tokens?

    Crypto tokens are units of value created on top of an existing blockchain. While the tokens share a lot of features of the underlying native coin. Anyone can create crypto tokens to do specific things. They are a digital asset class in their own right. 

    Currently, one the most common use of tokens is in smart contracts (a self-executing contract with the pre determined terms of agreement between buyer and seller being directly written into code). Ethereum is the blockchain network that was developed specifically to handle smart contracts. 

    Consequently, many dApps use Ethereum to underwrite their own tokens. To facilitate this use, Ethereum developed a framework to dovetail these tokens into their network architecture. These are called token standards.  One such standard is the ERC-20 token.

    Examples of a crypto tokens

    Polygon

    Currently, one of the bottlenecks of the Ethereum network is massive uptake of smart contracts by developers and users alike. This has caused network slow downs and higher network charges (Gas fees).

    The Polygon development team decided to create a network that dramatically increases the speed and scalability of the Ethereum network. The ERC-20 token, as discussed earlier, is the protocol that enables Polygon to utilise the Matic token (Polygon’s native token) to achieve the dApps goals. As a result, the Polygon network facilitates cheap and ultra-fast transactions.

    Brave Rewards

    Brave Rewards uses a utility token based on the Ethereum chain called the Basic Attention Token (BAT). This is used as a unit of account between advertisers, publishers, and users of the Brave browser.

    Conclusion

    Crypto tokens are not coins, but an asset in it’s own class using the benefits of the underlying blockchain.

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