What is a token of cryptocurrency?
A token is a unit of value. Basically, each cryptocurrency has a tradable good, such as the corresponding coins, certificates, virtual items or points. The tokens serve as an equivalent to these tradable goods.
Tokens are always subject to a certain rarity, because almost every currency has a token limitation. Initially, tokens are created and awarded as part of an Initial Coin Offering (ICO).
At the moment, the popularity of tokens is especially high, so more and more new tokens are coming onto the market. Not every token has its own blockchain, but an increasing number of cryptocurrencies are based on the Ethereum blockchain.
In these cases, a clear distinction must be made between the terms coin and token, since a token is a counter value that does not have its own blockchain. A coin, however, must have its own blockchain.
When can tokens be officially traded?
In principle, tokens can be placed on the market as part of an ICO. This results in a price at which the tokens are issued. A fair publication is also possible.
Here, the developers talk about the renunciation of “pre-mining”, in which, before entering the marketplace, new tokens are created by mining. Basically, these tokens are also referred to as crowdsale tokens.
There are also so-called developer tokens. These are retained by the developers to enable the future development of the currency. New tokens are won by mining. Here, miners provide computing power so that transactions can be completed in new blocks.