What is a token that plays an active role in blockchain projects

One of the methods used by blockchain startups to raise funds and attract investor interest is the issuance of tokens. The reason tokens are distributed in early-stage projects is to create a sense of exclusivity within the community and to grant certain privileges to participants. Token holders can enjoy various benefits such as opportunities to contribute to blockchain operations and priority access to new products, making them a vital part of the project’s growth stage.

The Essence of Tokens and Their Difference from Cryptocurrencies

Tokens are digital assets within the blockchain ecosystem that possess economic value and governance functions. Unlike cryptocurrencies, which operate independently on their own blockchains, tokens are built on existing blockchain platforms. Tokens created through fundraising mechanisms like Initial Coin Offerings (ICOs) are designed to have some form of utility.

Diverse Roles and Classifications of Tokens

The ways tokens are utilized are highly diverse and can be classified according to their purpose as follows:

Utility Tokens provide access rights to services or products within the project’s ecosystem and are directly linked to functionalities that users can actually utilize.

Governance Tokens are used to participate in decision-making processes of Decentralized Autonomous Organizations (DAOs), enabling token holders to influence blockchain management policies.

Security Tokens function as quasi-equities, deriving value from external assets, and are treated as tradable assets.

Non-Fungible Tokens (NFTs) are unique assets linked to visual assets or audio content, characterized by their inherent uniqueness.

Regulatory Environment and the Positioning of Tokens

It is important to note that the applicable regulations vary significantly depending on the type of token. Regulations related to security tokens may not apply to NFTs, and vice versa. Projects need to implement appropriate regulatory measures according to the purpose of the tokens, and the complexity of this process varies greatly depending on the classification of the tokens.