What Is The Blockchain Token?
The word 'token' means so many things to different people. If you are talking about an object that is used to represent another object, many can relate to it as a token. If the token is also described to mean a gift, some would accept this definition wholeheartedly. Also, for those familiar to a trade fair and its token exchange for cash, they would not argue that it is a cash worth device issued during a fair.
However, to a cryptocurrency enthusiast, the token is somewhat similar but yet very different from what others think it is. In this article, you would be enlightened on what the token means in the blockchain world, how it can be used, types, and also its drawbacks. Ready to know what it is? Let's move!
Although, the other definitions of a token are not totally wrong, yet, it is definitely not what the cryptocurrency market will term it as. What then is a token? In a very simple definition, a token can be explained to mean a device that has personal security details of a person in it, which gives the person access to a restricted place. The same way, you have a special security token that gives you access to your funds in a bank, that is exactly how this token works.
Now, in the cryptocurrency language, a token is not a physical device but a key that gives you access to information that is peculiar to you. This means a token cannot be handled but will pass for a worth that can be exchanged for money or any other digital item. In other words, a token is a valuable gadget(non-physical) that are stored in the blockchain system which contains the encrypted form of money that can be accessed by the owner of the token's security details.
How Can a Token Be Accessed?
The next question that comes to mind having known what token means would surely be how to access it. There is a private key to a token just like a car key but in this case, it cannot be seen. This key will be locked into an address that would show the token has been stored. In cryptocurrency, It is not enough to know that you have a token that is worth a lot but you would only have access to it when you have the unique key.
Also, the forms of the token are vast to a number of sectors ranging from utility token to security token. But the focus here still remains the payment token that interests the cryptocurrency folks.
This type of token is also called a fungible token. A fungible token is a token that deals with cryptocurrencies and it is well known that this currency is widely known to exist in the blockchain system. Now a good example of this payment token is the bitcoin. You should be getting a clue about where this description is heading which is a good thing.
Now, bitcoin is a very popular cryptocurrency that helps store both digital and physical assets. Many people use it for just transactions but its use is quite more extensive than that. The process of you storing your physical cash and converting it to bitcoin is tokenization. Therefore, we can conclude that an example of a token is bitcoin. More so, the token can also be in other forms of cryptocurrencies like Ethereum, Litecoin, Dash, Ripple, etc. All these currencies are tokens and that is just the right explanation you will not miss from any cryptocurrency enthusiast.
Well, why not token? There are so many reasons why you would want to have this form of token not just in the future but right now. With the token, you will be sure of these five things.
1) Reduction in local and international transaction fees - With no government in the picture of owning a token, you won't have to pay any other unnecessary fee to them.
2) Not having to queue to do urgent transactions - Everything with this form of token is online and all urgent transaction doesn't need a physical appearance to local banks.
3) Retention of your exact money(no bank maintenance charges) - This is more than a reason to up into using token because you will avert every form of excessive charges.
4) Third-party will not be involved in your business transaction - You won't be needing approval by any external body to do the transfer which is completely a good thing.
5) Autonomy will not be negotiable - Everybody wants full right over their money and token will help achieve that.
Are There Shortcomings?
Unfortunately, there is just one setback that is causing a threat to the token world which is security. It is true that there are private keys that give access to these token but these keys are prone to be hacked, thereby, the token can be accessed. Whoever has the key, has the token, so any slight leakage of the key means giving full access to the hacker. Although, hacking a decentralized system like this might be impossible to do but there are exceptional hackers who would go through the private keys to gain entry.
Nonetheless, it is possible to keep your key off the reach of these hackers by storing it offline. With your key right within your home(in a book probably), these crackers will have to do extra work getting the key. Also, protecting your wallet will give you more defense to being a victim of hackers.
The Future Of Tokens
It is safe to say that token is taking the financial market of the world to a great height because of its smart securities and many other possibilities. Project token in the future is seeing an economy that has the following.
1) A quicker transaction platform
2) No limit to transactions
3) A more advanced security system.
With these major aspects that token is already building and is set to improve on, the future is definitely bright for both investors and cryptocurrency lovers.
So, having read all these about token, what would you want to do? To token or not to the token? The smart option will be to follow the future train of those dealing with the token.
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