Token: what is it and what is it for?
You have probably heard about tokens lately, especially in relation to cryptocurrencies, the blockchain and the metaverse. But what exactly are they, and what are they for? We are already surrounded by tokens in our daily lives, even if we are not aware of it. Núria Rambla, 11Onze’s executive assistant, gives us all the clues.
“A token is a symbol, a code. Tokens are objects similar to a coin, but they are not legal tender,” Rambla explains. This means that they only have value within the market where it has been established that they will be used and only for the purpose for which they have been created. Tokens have been around for many years and the clearest example is casino or fairground tokens, those plastic coins that can only be used to play slot machines or poker or to ride the witch train or bumper cars.
And what characterises tokens? They have no value, they are issued by institutions or private companies, they are made of low-value materials, they have a control system and they are secure and cannot be counterfeited,” the executive assistant says. In the digital world, tokens use the infrastructure of cryptocurrencies, the so-called blockchain, to circulate. We could say, in fact, that a cryptocurrency is a token, even though a token is not a cryptocurrency at all.
“While a cryptocurrency has its own blockchain, a token always takes advantage of an existing blockchain, which is why it is cheaper for digital platforms,” Rambla argues.
In the virtual world, tokens have infinite applications: they can serve as security codes that are validated when we enter a website, as exchangeable points in video games, as miles travelled by airlines… In the world of finance, they are also used in so-called tokenization, that is, to protect our data when we make online payments, using a code that validates the transaction with total security. And in terms of investments, there are security tokens. Want to know more about tokens? Just watch the video below!
If you liked this article, we recommend you read:
Finance is already in the metaverse5 min read
Ever since Mark Zuckerberg changed the name of Facebook
You should check NFTs3 min read
The global demand for certificates of authenticity for digital works has skyrocketed