Talking Tokens

Aiming to clarify the language of tokens in the brand new crypto universe, let's talk about four types of tokens:


UTILITY TOKENS


These are those tokens whose ownership is required to use some sort of public digital service (by using a protocol).





Some of these tokens represent core value but many do not. The key question to assess the real future value of these tokens is to perceive the value proposition associated with the service to which they give access, as well as to understand to what extent they rely on distinctive resources and whether or not they can enjoy sustainable competitive advantages.




WORKING TOKENS


These are those tokens whose ownership gives the right to perform work in some kind of decentralized organization, contributing to the functioning of such an organization in the absence of a central power.





Obviously, the value of these tokens correlates with the added value of the work performed by their owners, and one should realize how useful this work really is for the decentralized community itself. From holders perspective, this utility can be measured in the form of monetary rewards or increased reputation. However, in a less speculative and more productive view, the user’ rewards growth happens when he figures out how to have an active voice in the decentralized network, in other words when he handles to participate in order to create the network relevance itself.




HYBRID TOKENS


These tokens serve both to use public digital services and to perform some kind of work.

The predictable evolution of the algorithms used to reach distributed consensuses, from proof-of-work to proof-of-stake or proof-of-brain, will lead to the proliferation of hybrid tokens. This will happen probably because, with such a change, barriers to entry will diminish greatly, making citizens' participation more inclusive in decentralized networks where will be possible not only to access multiple services but also receive micropayments when performing many mundane and everyday tasks. I think that this entry gate, through work and not through property, will be preponderantly used in the democratization of access to the crypto universe.




SECURITY TOKENS


These tokens have a more obvious fundamental value because it stems from the ownership of traditional goods, cryptographically representing assets such as real estate, gold, etc.





I think there will be a proliferation of security tokens (traditional assets based tokens, or “equity tokens” if representing stocks) because of their potential liquidity and ubiquity.

These are the easiest to understand tokens, but not as interesting for the progress of civilization as the previous ones (especially the "working tokens", at least for the human evolution to which I aspire).

I hope I could have been useful.


Cheers!

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