[2018-09-01] Why Do So Many Blockchain Startups Create Their Own Coins?

[frauswif]

"I've come across many new projects recently stating the intention to “transform” a given industry through blockchain technology. These projects — regardless of what it proposes to do — often involve the creation of an online platform that requires the use of a native/new token. This has resulted in glut of altcoins. As of this summer, there are over 2000 cryptocurrencies available. Conducting transactions within a proprietary platform or “ecosystem” is the main (often only) use for most of these tokens. Some of them are also traded on exchanges.

Blockchain technology does not require the use of cryptocurrencies to function. It is entirely possible to use it without tokens. The tokenization of value is just one of its possible applications. Given this, it begs several questions about how the currency cryptospace operates. Why do projects create a unique token for what they propose to do? Why don’t startups develop platforms that accept existing cryptocurrencies, such as Bitcoin, NEO, ETH, Ripple, etc.? When contributors to ICOs but tokens what kind of value do they hold? To answer these questions, I’m going to first discuss some basics of blockchain technology. Then I will delve a bit deeper into its application in the real estate sector."

Full article: https://hackernoon.com/why-do-so-many-blockchain-startups-create-their-own-coins-99fcab38ad75

[entrepmind23]

Blockchain technology does not require the use of cryptocurrencies to function. It is entirely possible to use it without tokens. The tokenization of value is just one of its possible applications. Given this, it begs several questions about how the currency cryptospace operates. Why do projects create a unique token for what they propose to do? Why don’t startups develop platforms that accept existing cryptocurrencies, such as Bitcoin, NEO, ETH, Ripple, etc.? When contributors to ICOs but tokens what kind of value do they hold? To answer these questions, I’m going to first discuss some basics of blockchain technology. Then I will delve a bit deeper into its application in the real estate sector."

Basically, the tokens are there to represent the value or "shares" the investors hold in the project. These tokens may have use or not in the future project but then when they are raising funds for the project, the investors need to have something in exchange for their investment and these tokens are the exchange to it or what it represents. This may become valuable or not in the future depending on the outcome or demand that's why it is quite risky to invest in ICOs.

Why don’t startups develop platforms that accept existing cryptocurrencies, such as Bitcoin, NEO, ETH, Ripple, etc.? When contributors to ICOs but tokens what kind of value do they hold? To answer these questions, I’m going to first discuss some basics of blockchain technology. Then I will delve a bit deeper into its application in the real estate sector."

They have the option to just make a platform that accept those cryptocurrencies that are already listed and has some value but then the investors would not have anything that they hold to confirm that they are one of those who own tokens that's why a token is issued. In addition, some of these projects can only be accessed when someone uses their tokens so that it will have value and the project has a choice of issuing additional tokens if they need more funds.

[odolvlobo]

TLDR:

We can now understand why new blockchain startups are creating so many so-called utility tokens. Most of the time, they not necessary to the functioning of online platforms. The reason they exist is to raise funds during an ICO. ... Thus, the purpose of most cryptocurrencies is not meeting technological needs. Instead, they are a like security investment.

Investors should stay away from companies that create unnecessary tokens because it demonstrates poor judgement.

[cetald]

Creating tokens is the way to monetize the project. In addition, as a rule, the token is also a utility-token of the system. That is, it is used for operations and represents value.

[sandra.blake24]

Is it vital for a startup to have it's own currency?

[Dogtanian]

They're created because they've become the new fad in investing. Most of them are just ways for companies to get money from gullible or naive investors often for a company or product that is at best half-assed and wouldn't get investment any other way. There's no real regulatory body monitoring ICOs so most of them can do what they want and there's no repercussions if they screw up and don't deliver what they promised which is what seems to happen to most of them.