Introduction
After nearly a year of working with blockchain and digital currencies, I've compiled essential knowledge about tokens—focusing solely on tokens rather than broader blockchain concepts.
1. What Are Digital Currencies?
Digital currencies rely on cryptographic techniques for creation, issuance, and circulation. Most mainstream cryptocurrencies use cryptography to ensure transaction security and control unit creation—often termed cryptocurrencies. These operate on decentralized consensus mechanisms.
- Coin: Typically mined (e.g., BTC, ETH, EOS), coins serve as monetary units and form the base layer of a blockchain.
- Token: Represents rights within a blockchain project, usually developed as a DApp (Decentralized Application) atop a base chain. Tokens depend on the underlying chain for circulation.
For clarity, this article refers to both coins and tokens as "tokens."
2. Token Contract Standards
Standardized tokens enhance security and interoperability by defining rules for functionality. The most widely adopted is Ethereum’s ERC-20, used by ~90% of tokens (e.g., PRS, DGD). Other protocols include BTC’s native standard and QRC-20 (Qtum).
3. Token Types
| Type | Description | Examples |
|---|---|---|
| Native | Base-chain tokens (e.g., BTC, ETH, QTUM). | |
| Platform | Exchange-issued tokens with value mechanisms (e.g., BNB, OKB, HT). | |
| Stablecoin | Fiat-pegged tokens (e.g., USDT ≈ USD, bitCNY ≈ RMB). | |
| Equity | Tokens representing stock ownership (e.g., Lykke). | |
| Creator | Rewards content creation (e.g., Steemit, iVeryOne). | |
| Service | Facilitates service exchanges (e.g., Siacoin for storage). |
Additional categories may emerge as the ecosystem evolves.
4. Token Key Details
When evaluating a token, verify:
- Full name & symbol (e.g., "Ethereum" / ETH)
- Total/circulating supply
- Official links (website, Twitter, community)
- Protocol (e.g., ERC-20 vs. BTC-based USDT)
👉 Check token metrics on CoinMarketCap
Warning: Beware of "spoofed" tokens (with hidden characters in names). Use trusted wallets/exchanges to avoid scams.
5. Fundraising Models
- ICO (Initial Coin Offering): Public token sales (unregulated, akin to IPO).
- IEO (Initial Exchange Offering): Token launches via exchanges.
Listing on major exchanges often requires hefty fees, creating market barriers.
6. Acquiring Tokens
- Purchase: Via exchanges (e.g., Binance, OKX) or OTC. Avoid unauthorized ICO participation.
- Mining: Earn tokens by supporting network operations (e.g., BTC). Profitability fluctuates.
- Airdrops: Free distributions (often requiring token holdings). Used for marketing.
7. Token Transactions
- TxHash: Unique transaction ID (e.g.,
0x...for ETH). Trackable on explorers like Etherscan. - Addresses: Alphanumeric strings (e.g., ETH:
0x..., BTC:1...). - Gas Fees: Paid to miners; higher fees prioritize transactions.
- Confirmations: Number of blocks validating a transaction. Balance speed vs. security.
8. Storing Tokens
- Exchanges: Convenient for active trading but less secure for large holdings.
- Wallets: Safer but require managing private keys (e.g., MetaMask, Ledger).
FAQs
Q: What’s the difference between coins and tokens?
A: Coins are native to their blockchain (e.g., BTC), while tokens represent assets/rights built atop existing chains (e.g., ERC-20).
Q: How do I verify a token’s legitimacy?
A: Cross-check contract addresses on block explorers and avoid unofficial links.
Q: Are stablecoins truly stable?
A: Most peg to fiat reserves, but deviations occur (e.g., bitCNY trades below RMB).
References omitted per guidelines. Focus retained on actionable insights.
This streamlined article:
- Removed ads/sensitive content
- Integrated SEO keywords (*tokens, ERC-20, ICO, stablecoin*)
- Added FAQs and anchor texts
- Exceeded 500 words with structured depth