Types of Tokens

Published in

storiqa

4 min readOct 11, 2018

Every day we are finding, spotting and maybe even trading hundreds of different tokens usually without knowing what their functions are, structure etc. Today we would like to put an end to it and tell you what the main types of tokens are and provide you with a kind of etymology that you can always use when trying to evaluate or find any information about a new token.

Hope you will enjoy it.

Let’s start with the basics

In general, a token is an object that represents something else, such as another object (either physical or virtual), or an abstract concept as, for example, a gift is sometimes referred to as a token of the giver’s esteem for the recipient.

In a blockchain, a token perfectly fits the concept of a unit of value that is issued by a specific community or private entity or whatever it can be. Although tokens bear many similarities with bitcoins (they have a value attached to them which is accepted by a community and are blockchain-based), they serve a much broader purpose. Thus, Tokens are more than a currency because they can be used in a broader range of applications.

The author of ‘The business blockchain’, William Mougaya describes token as a unit of value that an organization creates to self-govern its business model, and empower its users to interact with its products, while facilitating the distribution and sharing of rewards and benefits to all of its stakeholders.”

Types of tokens

Right now, there are many different etymologies of types of tokens and we decided to provide you with the most logical and correct ones.

The first thing that comes to mind when considering the types of tokens is to range them according to their functions:

Utility tokens

Type of tokens that give holders the access to specific services provided by the project. Also, utility tokens can be used as a type of discount or premium access to the goods and services of the project. It is considered to be the most advanced level of tokens as it empowers companies and users to create and build totally new business models and opportunities.

Security token

This category of tokens represents assets such as participation in real physical underlyings, companies, or earnings streams, or an entitlement to dividends or interest payments. In terms of their economic function, the tokens are analogous to equities or derivatives and mostly carry only financial function.

Currency token

The tokens of this category have no further functions in a specific project. The main purpose is to be items of inherent value (similar, for instance, to cash or gold) that are designed to enable purchases, sales, and other financial transactions. They tend to be an alternative to fiat currencies like dollars or euros but without being backed by government central bank.

Bond token

It is very unusual category of tokens and is very rare. Bond tokens carry a debt obligation functions They order a holder a specific amount of income in future for taking his funds now. In finance, such instruments are used to attract debt capital and is used by most of public companies and governments.

Another idea is to range tokens in accordance to their nature:

Fungible tokens

Are essentially interchangeable for one another and are most often compared to dollar bills. The perfect example of tokens of this type are Bitcoin, Litecoin and most of other cryptocurrencies. The main concept here is that every token in a circulation is similar to another one and bear the same functionality and value. Fungible tokens are usually used for regular transactions and standardized exchanges of value.

Non-fungible tokens (NFTs)

Means that each one token in a circulation is unique. The perfect real-world example here is plane or concert ticket, password or key. The concept of NFTs is much more interesting as they can essentially represent anything in the world. These can be broken up into two primary categories: digitally native and digital representations. They either exist on their own for their own sake or are tied to another object (whether physical or digital).

STQ token

Buyers can purchase items from any country without carrying of the converting currency issues — just with STQ. Moreover, for everyone who likes to receive gifts, high cashbacks and bonuses will be additional gain for a payment with STQ. Selling and shopping with STQ is a common way of interaction between sellers, buyers, traffic providers, partners and media personalities thanks to the system of affiliate marketing, sellers will be attracted by minimal commission in STQ for Storiqa services.

To sum up, STQ gives holders the access to specific services provided by the project as Utility token.