The term “cryptocurrency” has been a bit of a buzzword over the last few years, and with good reason. Experts predict that the cryptocurrency market will grow with a Compound Annual Growth Rate of 56.4% between 2019 and 2025.
There’s never been a better time to get in the cryptocurrency game. But, it can be overwhelming knowing how to begin.
Let’s start with cryptocurrency tokens. Do you know what they are and how they differ from a crypto coin?
If not, you’re in the right place. Keep reading this cryptocurrency guide to learn about what a cryptocurrency token is, and the benefits of tokens.
What Are Cryptocurrency Tokens?
Most people associate cryptocurrency with digital money, like Bitcoin. But, crypto tokens aren’t digital money. Rather, they’re digital assets.
They’re still used as a virtual currency, but they represent a specific use and are created through an initial coin offering (ICO). Cryptocurrency tokens also reside on their own blockchains.
Think of cryptocurrency tokens as you would tokens at a carnival. If you go to a fair, you might use money to purchase tokens, which are then used to buy access to rides or games.
A carnival token represents a certain value. Cryptocurrency tokens operate in the same way.
Classifications of Cryptocurrency Tokens
There are two main types of cryptocurrency token classifications: security and utility.
Security tokens are subject to federal laws, as they are digital assets. They get their value from an external asset that’s eligible for trading. If you don’t follow the federal regulations for securities, you could face penalties or fines.
Utility tokens, on the other hand, operate almost like a digital coupon. They are user tokens that grant future access to services or products by a particular company.
Buying and Storing Tokens
If you’re interested in buying cryptocurrency tokens, you can do so through an ICO on a project’s website. You’ll want to do some research on the project before participating in the ICO, and you’ll need to use a major cryptocurrency, like Ether or Bitcoin.
You can also buy crypto tokens on an exchange and store them in a secure digital wallet. Learn more about buying tokens by visiting Swapfol.io.
Benefits of Crypto Tokens
There are plenty of upsides to using cryptocurrency tokens, particularly those of the security classification.
Security tokens are safe and secure, making them a trustworthy investment that’s not as susceptible to scams as other types of currency.
They also give you more options when it comes to investments, and you can sell tokens quickly if you need near-instant access to funds.
Start Exploring the World of Digital Currency
Now that you know more about how cryptocurrency tokens work and some of the benefits of using them, why not expand your horizons a bit? The world of cryptocurrency is exciting and there’s never been a better time to start exploring it.
You just might be surprised at how much you can make.
Looking for other helpful advice like this? Browse through our other articles on money and finances before you go.