Token (cryptocurrency)
The word "token" is used in the world of "cryptocurrency" to describe a particular currency that can be exchanged for some tangible good or service. In other words, it is backed up or supported by the value of this good or service. Many cryptocurrencies have no official exchange value and are worth only what others are willing to exchange for them.
Tokens are often created to facilitate some online service for much the same reason that businesses might create a physical token to simplify accounting and centralize cash transactions. The value of these goods or services provides a fixed reference point for the value of the token. Sometimes an outside marketplace evolves where people will trade other currencies for the tokens allowing the prices to move independently. For instance, tickets to sporting events often trade on third party websites like StubHub at prices that may be greater or less than the face value.
The word "token" is treated differently that "coin" by United States law. Companies routinely use the word token to refer to a small symbol of value used in arcades, fairs, or other events to reduce the risks and security complexities of using a major currency. There are no major regulations that restrict this behavior.[1] Companies that create securities like shares, however, are subject to a complete set of regulations administered by the Securities Exchange Commission, the Federal Reserve bank, the Department of Treasury and other US government agencies. When the creators can make the credible claim that their cryptocurrency is connected to some internal market for goods or services like a fair, they may claim that that they're merely creating a digital token and avoid much of the regulation. [2][3][4]
References[edit]
- ↑ "Here's Some Cryptocurrency. Now Please Use It". Retrieved 2018-09-12.
- ↑ "Differences Between Cryptocurrency Coins and Tokens". Master The Crypto. Retrieved 2018-09-12.
- ↑ BBVA (2017-07-07). "What is a token and what is it for? | BBVA". NEWS BBVA. Retrieved 2018-09-12.
- ↑ "Digital Tokens: Usage, Evolution, and Regulations in 2018 - The Bitcoin News". The Bitcoin News - Leading Bitcoin News and Cryptocurrency News. 2018-08-07. Retrieved 2018-09-12.
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