April 30, 2018

Tokens and cryptocurrencies: some clarifications

Tokens and cryptocurrencies: some clarifications

Have you ever heard of tokens linked to cryptocurrencies? You probably have.

Digital currencies have become a hotly debated issue worldwide in recent times, and they have brought a whole new vocabulary with them.

Are you familiar with these new words? You are probably not. In a field as vast and innovative as that of the Blockchain there is still a lot to learn and discover. Let’s clarify some important points.

Tokens and ICOs: an indivisible pair

Let’s start from the definition: generally speaking, the token is a digital certificate that can be used to access the services offered by a startup business.

However, the life of a token begins long before the launch of the business. It is a currency of exchange which is offered at an advantageous “price” during an Initial Coin Offering in order to attract potential investors.

Tokens and cryptocurrencies: discovering the differences

Think of a service based on the Blockchain, like Xriba, whose cryptocurrency of reference is Ethereum. To access the innovative financial management services offered by the platform, however, virtual currency will not be enough: tokens will be needed.

It is important not to confuse the latter with the digital currency the service is based on.

The reason is simple: tokens can only be used within the startup company (as happens with XBC tokens for Xriba), while a cryptocurrency can be used anywhere.

The link between tokens and virtual coins, however, is essential: anyone who wants to use a service will necessarily have to buy the tokens, paying the seller with a virtual currency.

Tokens serve a wide variety of functions

Blockchain technology has given rise to numerous types of tokens with different functions.

There are Asset Tokens, digital certificates that attest to the ownership of an asset. So-called Utility Tokens give the opportunity to use a specific service.

Equity Tokens allow holders, for instance, to express a judgment or cast a vote during a board meeting, similarly to traditional equity traded on stock markets.

However, these functions are not fixed, and each startup business can independently decide the role their tokens will play in the system. Think of Xriba and the Master Token (XRA) as an example of this flexibility.

They can usually be obtained during the pre-ICO phase and can be converted, through future AirDrops, into Utility Xriba Coins (XBC), i.e. tokens that will allow access to financial management services and take advantage of their innovative features.

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