What is crypto?
A lot of people I speak with tell me that they don’t want to get into crypto because it’s only related to money but it isn’t.
Crypto is often mistaken for digital money but crypto is actually from cryptography which is a discipline of cryptology that aims to protect messages and ensure confidentiality, authenticity, and integrity by using secrets or keys. Basically crypto is related to protection, not finance.
Research shows the different sectors where cryptography is used with the number one being computers with 45.2% then business with 33.8%. The last one is in the sports sector with barely 7.4% — this could become more when crypto passes its mainstream entrance.
Thus, saying that crypto is only finance or tech is not accurate — Fintech is using crypto would be better.
What about tokens?
There are different types of crypto tokens: the currency linked to fiat that is indeed money-based, the security token, the utility token, and the governance token. Here is a little description of them.
Utility token
A utility token is a token whose main function is to provide future access to a service or product offered by a company. Often used in ICOs, utility tokens are very often a way for a company to generate interest in one of its upcoming products.
Example: StorJ (pronounced Storage) is an ERC-20 utility token used to store data in a decentralized cloud. It’s a marketplace for disk space. The users rent their free disk space and earn STORJ or pay STORJ to rent other users’ disk space.
Security token
The security token represents a security or digital asset. It must respect the Howey test and is considered a real investment or financial asset with more or less long-term profit objectives. The security token can be viewed as the digital equivalent of a company’s stock or a share of ownership in the purchase of a rental.
Example: Many real estate agencies tokenize their properties in order to increase their client base — RealIT allows the purchase of properties in the United States or even Masteos in France.
Governance token
The governance tokens give the holders the power to influence decisions concerning the core protocol, product or feature roadmap, hiring and staffing, and changes to governance parameters to a company. It is like a “voting token”.
Example: Maker (MKR) is a governance token that allows its holders to vote on decisions on the decentralized finance protocol that the stablecoin DAI runs on. They can vote to change the complex economic rules that govern the decentralized lending that allows DAI to keep its price stable.
