{"id":610,"date":"2019-07-23T08:42:14","date_gmt":"2019-07-23T07:42:14","guid":{"rendered":"https:\/\/affidaty.io\/blog\/?p=610"},"modified":"2026-01-31T23:08:23","modified_gmt":"2026-01-31T22:08:23","slug":"elements-of-blockchain-digital-token-what-it-is-and-what-it-is-used-for","status":"publish","type":"post","link":"https:\/\/affidaty.io\/blog\/en\/2019\/07\/elements-of-blockchain-digital-token-what-it-is-and-what-it-is-used-for\/","title":{"rendered":"Elements of Blockchain: Digital token. What it is and what it is used for."},"content":{"rendered":"\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/affidaty.io\/blog\/wp-content\/uploads\/2019\/07\/Token-digitale-rid-1.jpg\" alt=\"\" class=\"wp-image-611 lazyload\"><noscript><img decoding=\"async\" width=\"600\" height=\"338\" src=\"https:\/\/affidaty.io\/blog\/wp-content\/uploads\/2019\/07\/Token-digitale-rid-1.jpg\" alt=\"\" class=\"wp-image-611\" srcset=\"https:\/\/affidaty.io\/blog\/wp-content\/uploads\/2019\/07\/Token-digitale-rid-1.jpg 600w, https:\/\/affidaty.io\/blog\/wp-content\/uploads\/2019\/07\/Token-digitale-rid-1-300x169.jpg 300w, https:\/\/affidaty.io\/blog\/wp-content\/uploads\/2019\/07\/Token-digitale-rid-1-768x432.jpg 768w\" sizes=\"(max-width: 600px) 100vw, 600px\" \/><\/noscript><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Intro.<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Often the <strong>digital token<\/strong> concept is misunderstood with the <strong>cryptocurrency<\/strong> one.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, these instruments are to be considered separately. Understanding their role can be harder than one thinks, but I will guide you with some examples of <strong>digital tokens<\/strong> and coins.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Think about the phone card that we used years ago to make calls from phone booths. These were plastic sheets to which was assigned a value, a function, to be used to make phone calls using the \u201cmachinery\u201d, the phone booth.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Think about chips in a casino. To use the game systems in a casin\u00f2, the latter makes fake coins available (you can\u2019t use them in a supermarket as with Euros). One will use (purpose) them inside the (machinery) casino.&nbsp;<\/p>\n\n\n\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Digital tokens and cryptocurrencies in the blockchain domain.<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">In the <strong><a rel=\"noreferrer noopener\" aria-label=\" (apre in una nuova scheda)\" href=\"https:\/\/affidaty.io\/blog\/en\/2019\/07\/inside-blockchain-the-transaction-how-and-by-what-it-is-composed\/\" target=\"_blank\">blockchain<\/a><\/strong><a rel=\"noreferrer noopener\" aria-label=\" (apre in una nuova scheda)\" href=\"https:\/\/affidaty.io\/blog\/en\/2019\/07\/inside-blockchain-the-transaction-how-and-by-what-it-is-composed\/\" target=\"_blank\"> ecosystem<\/a>, there are both <b>Digital<\/b> <b>Tokens<\/b> and cryptocurrencies&nbsp; (coins). While cryptocurrencies are easy to understand, since these have the same use in the <strong><a href=\"https:\/\/affidaty.io\/blog\/en\/2019\/07\/inside-blockchain-the-transaction-how-and-by-what-it-is-composed\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (apre in una nuova scheda)\">blockchain<\/a><\/strong><a href=\"https:\/\/affidaty.io\/blog\/en\/2019\/07\/inside-blockchain-the-transaction-how-and-by-what-it-is-composed\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (apre in una nuova scheda)\"> domain<\/a> as the Euro in real life, <b>Tokens<\/b> seem harder to understand, but only in appearance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In a casin\u00f2, for example, Euros can be used to play instead of chips, right?&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It would be more comfortable and direct. However, this isn\u2019t the case. Casinos use chips because these have a function, which differs from the Euro one.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The same goes for <b>Tokens<\/b>. Each one of them is created to follow its rule set of various kind. The most known and used <b>token<\/b> is the one from Ethereum, currently called ERC20.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Smart Contracts are then added to the tokens, so that the basic token can easily &#8220;manage&#8221; other sets of additional rules. We can therefore have many apparently similar tokens because they are based on the same &#8220;mother&#8221; token, but different because they are joined by a further set of rules (smart contracts) in relation to the use of destination: the same highway on which many cars travel.<\/p>\n\n\n\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">The \u201cassignment\u201d as a critical element.<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The crucial element to understand the <b>token<\/b> is the \u201cassignment\u201d: every <b>token<\/b> is created to perform different assignments. ERC20 is Ethereum standard upon which many other <strong>cryptocurrency<\/strong> systems were created: Eidoo, Bancor, TenX, Dragonchain, Envion and <a href=\"https:\/\/etherscan.io\/tokens\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (apre in una nuova scheda)\">many more.&nbsp;<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A new Ethereum token standard is recently taking shape: ERC721, on which systems have been built that have quickly become famous, such as the CryptoKitties or the DADA Collectible and <a href=\"https:\/\/etherscan.io\/tokens-nft\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (apre in una nuova scheda)\">many others<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, if the <strong>cryptocurrency<\/strong> is the coin, what assignments do the <b>token<\/b> carry out?<\/p>\n\n\n\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Token types.&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Briefly, there are three kinds of <b>digital<\/b> <b>tokens<\/b>:&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li>Those in which the assignment is the same as the one of a coin: this is Bitcoin case.<br>\n<\/li><li>Then there are the <b>tokens<\/b> that provide the owner one or more rights that he\/she can use towards who generated the <b>token<\/b> itself, for example:<br>\n&#8211; Right to <b>receive payments in the future<\/b>;<br>\n&#8211; <b>Property right of an Asse<\/b>t, as participation shares;<br>\n&#8211; <b>Right to receive a determined work performance<\/b>.<br>\n<\/li><li>Finally, there are the so-called \u201cmixed\u201d ones: like <b>tokens<\/b> used to vote.&nbsp;<br>\n<\/li><\/ol>\n\n\n\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Token role during an ICO.<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Now that we defined the types of <b>digital<\/b> <b>token<\/b>, let\u2019s think about the most popular method in the <strong>blockchain<\/strong> world to collect money in a way similar to crowdfunding: ICOs.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When a new <strong>blockchain<\/strong> is born (or to put it better, a new <strong>cryptocurrency<\/strong> supported by a new, or existing <strong>blockchain<\/strong>), frequently an ICO (Initial Coin Offering) is launched.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">ICOs are nothing but a <b>token<\/b> release, which the company will sell to users, usually in exchange for Bitcoin, Ether or other known and used cryptocurrencies. The proceeds from the <b>token<\/b> sale will be used by the firm that promoted the ICO to finance itself. The users that bought <b>tokens<\/b> will have future rights towards the company, based on the kind of <b>token<\/b> sold-bought.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That\u2019s what <b>tokens<\/b> are in this case: a future right for the buyer. For example, it may be a right to exchange later the <b>tokens<\/b> that he\/she bought for coins, or a <strong>cryptocurrency<\/strong> amount.<\/p>\n\n\n\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">How do tokens apply in real life?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Coming back to the phone cards above-mentioned. When we buy it, we acquire the right to use credits contained in it to make calls in a phone booth.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The same goes for the chips in the casino. When we buy it, we acquire the right to use the corresponding value inside the casino.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Also, the telephonic traffic of a cellphone may be considered as a <b>token<\/b>: one acquires the right to use the traffic credit inside the network of the provider.&nbsp;<\/p>\n\n\n\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">In summary.<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Some examples of <b>digital<\/b> <b>Tokens<\/b>.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Ethereum <strong>blockchain<\/strong> has led the way both in the Smart Contracts and <b>digital<\/b> <b>Tokens<\/b> fields. As stated before, many other <strong>blockchain<\/strong> systems are built using Ethereum proprietary <b>token<\/b>, ERC20, by sheer convenience and efficiency.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>the coin is the currency, namely the <strong>cryptocurrency<\/strong>;&nbsp;<br>\n<\/li><li>the Smart Contract is similar to a digital contract, the agreement between the part, enforced by the mathematic rules of the <strong>blockchain<\/strong>;<br>\n<\/li><li>the <b>token<\/b> is the medium by which one of the three kinds of rights above-mentioned is being enforced.&nbsp;<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Intro. Often the digital token concept is misunderstood with the cryptocurrency one.&nbsp; However, these instruments are to be considered separately. Understanding their role can be harder than one thinks, but I will guide you with some examples of digital tokens and coins.&nbsp; Think about the phone card that we used years ago to make calls [&hellip;]<\/p>\n","protected":false},"author":267,"featured_media":607,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jnews-multi-image_gallery":[],"jnews_single_post":{"subtitle":"","format":"standard","video":"","gallery":"","source_name":"","source_url":"","via_name":"","via_url":"","override":[{"single_blog_custom":"","sidebar":"","second_sidebar":"","share_position":"","share_float_style":"","post_date_format":"","post_date_format_custom":"","post_reading_time_wpm":"","zoom_button_out_step":"1","zoom_button_in_step":"1","number_popup_post":"1"}],"image_override":[{"single_post_thumbnail_size":"","single_post_gallery_size":""}],"trending_post_position":"","trending_post_label":"","sponsored_post_label":"","sponsored_post_name":"","sponsored_post_url":"","sponsored_post_logo":"","sponsored_post_desc":""},"jnews_primary_category":{"id":""},"jnews_social_meta":{"fb_title":"","fb_description":"","fb_image":"","twitter_title":"","twitter_description":"","twitter_image":""},"footnotes":""},"categories":[1487,349],"tags":[794,800,170,804,175,183,66,177],"coauthors":[1176],"class_list":["post-610","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-educational-ita-en","category-educational-eng","tag-ai-eng","tag-bitcoin-en","tag-blockchain-en","tag-crypto-en","tag-ethereum-en","tag-pos-en","tag-smart-contract","tag-smart-contracts-en"],"_links":{"self":[{"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/posts\/610","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/users\/267"}],"replies":[{"embeddable":true,"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/comments?post=610"}],"version-history":[{"count":0,"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/posts\/610\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/media\/607"}],"wp:attachment":[{"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/media?parent=610"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/categories?post=610"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/tags?post=610"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/coauthors?post=610"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}