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token is actually best defined as the balance of some kind of account.
But, perhaps most importantly, it's a balance that can really mean anything its founder wants it to mean. To date, tokens have been made to represent a user's reputation within a system (augur), a deposit in US dollars (tether), the quantity of files that are saved in it (filecoin) and the balance in some internal currency system (bitcoin).
Because of this, I sometimes argue that tokens don't even exist – mostly, because I want to draw attention to the fact that they always have a very specific meaning.
If we want an analogy, tokens can turn everything that we're used to seeing in paper form – including shares, and money and promissory notes – digital. But the terms we will use for these things will remain unchanged (shares will still be shares). The fact that crypto assets are stored in a decentralized accounting system, or require digital signatures, doesn't change their meaning or value.
As such, the problem that is emerging isn't with the actual terms themselves, but that people have begun to assign attributes to tokens that they can't possibly have.
There are people who claim that cryptocurrency tokens are something entirely new – and that projects that issue tokens can become amazingly transformed.
Sadly, that's not the reality.
But, perhaps most importantly, it's a balance that can really mean anything its founder wants it to mean. To date, tokens have been made to represent a user's reputation within a system (augur), a deposit in US dollars (tether), the quantity of files that are saved in it (filecoin) and the balance in some internal currency system (bitcoin).
Because of this, I sometimes argue that tokens don't even exist – mostly, because I want to draw attention to the fact that they always have a very specific meaning.
If we want an analogy, tokens can turn everything that we're used to seeing in paper form – including shares, and money and promissory notes – digital. But the terms we will use for these things will remain unchanged (shares will still be shares). The fact that crypto assets are stored in a decentralized accounting system, or require digital signatures, doesn't change their meaning or value.
As such, the problem that is emerging isn't with the actual terms themselves, but that people have begun to assign attributes to tokens that they can't possibly have.
There are people who claim that cryptocurrency tokens are something entirely new – and that projects that issue tokens can become amazingly transformed.
Sadly, that's not the reality.
My understanding is that if a cryptocurrency has its own blockchain then it is referred to as a coin. If it is traded on someone elses blockchain then it is referred to as a token. It is also quite common for a cryptocurrency to be issued as a token and then develope its own blockchain and become a coin. I have had that happen with ICON (ICX) which now trades on a propriety blockchain and the OPEN Platform (OPEN) which is in the process of transitioning to its own blockchain. I have never heard anyone claim that cryptocurrency is something entirely new, only that it is an entirely new way of doing things. Those things you talk about existing in paper form are nothing more than a paper record. The paper has no value, only the information has value. Since this is the 21st century we no longer have need for these paper records when they can be replaced by a much more efficient and verifiable system like a decentralised ledger, all those paper records will eventually be replaced by the blockchain.
