A token in programming is a tool for user verification at a server. A user sends a password to a server and receives a token in return, but on blockchain a token has quite another meaning.
What is a token in blockchain context?
On blockchain the main token function is the other one. On blockchain a token is a balance which is saved inside of the smart-contract.
The token context will look like the following:
Smart Contract {
balance {
John: 500
Peter: 1000
Helen: 300
}
}
The figures 500, 1000 and 300 near the names John, Peter and Helen are the number of recorded blockchain tokens which John, Peter and Helen possess respectively.
These values can be expressed in any cryptocurrency - ETH, Bitcoin etc. Similar entries are stored on several computers, which are connected to one another and into blockchain and if the information on each machine is the same than we can say that a consensus is reached.
What types of tokens exist?
What types of tokens exist?
The most popular tokens are:
- User tokens (utility token)
- Tokens as company’s shares
- Derivative tokens (futures, option)
A user token (a utility token) is a token, which is used inside of system. An example of transactions with a user token can be the purchase of subjects inside of system itself. Also, user tokens can be earned inside of the system or with the help of mining. E.g. you can receive tokens inside of the Steemit system due to the publishing of popular content.
A token as a company share Is close to the real economy. It allows the tokenization of assets, lunch emit shares and furthers distribution among investors.
Any token can be like a derivative, eg. futures or an option.
Let’s simulate the situation for deep understanding of tokens types.
You are the owner of PizzaChain pizzerias and you would like to open the 4th outlet, but at the moment you don’t have enough funds for scaling. So, choosing among available variants of tokens, you have two alternatives:
- PizzaChain Action
50% of assets can be sold for capital procurement as tokenized stakes of the company. In that case, an investor, who has bought tokens, will receive annual dividends as the net profits. Of course, the dividends amount depends on the quantity of purchased tokens.
An example:
The company’s net profits - $ 50 000 a year
The total emission - 150 000 tokens
Listed for sale - 50% of the company
For sale - 50 000 tokens
The price per token - $1
An investor has purchased 10 000 tokens for $10 000 (20%)
The annual dividends sum is $10 000
If the owner doesn’t want to sell a part of his business?
- PizzaChain Option
There is a possibility to attract investments and return money later. This scheme looks like bank credits. It is implemented on blockchain with the help of a token-option issue. The owner exposes company profits data for the current moment and in the forecast. Investors, persuaded in option profits, invest the money - the capital procurement takes place in this way. It is not obligatory for an investor to wait until you purchase his token - he can sell this token at any crypto stock exchange.
The net profits - $50 000 $ a year
Listed for sale - 50 000 tokens
The price per token - $1
An investor has purchased 5 000 tokens for $5 000
The investor sells an option at the stock exchange 2 months later for $10 000
Any asset, which anyway can be calculated or justified (gold, oil, sand, mining pools, real estate, alternative energy and even artifacts inside games), can be tokenized. Game artifacts can be purchased and sold at common game stock exchanges, but in the decentralized area procedures with artifacts will be several times more dynamic. The capacity for tokenization exists even in the AR (augmented reality) technology sphere. It will be possible to buy and resell virtual estate inside of digital world.
The Nousplarform project (tokenized investment funds on blockchain) is in the developing stage of combining tokenized assets into funds.
Project’s key features:
- investors can choose a certain number of funds according to the
rating - investors get access to the large amount of assets, which are not
available in classic investing - investors can sell and buy funds’ shares at the decentralized
stock exchange - investors can quickly diversify risks, creating their own
investment portfolios from top funds
Nousplatform provides new investors to funds, and gives the transparent investment scheme of owning funds to investors.
For detailed information about Nous platform, please visit the official site: https://nousplatform.com/
The article was created based on Anatoliy Ostrowski’s speech, Nousplatform CTO - 