{"id":37204,"date":"2017-11-02T15:00:57","date_gmt":"2017-11-02T13:00:57","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=37204"},"modified":"2025-08-29T13:50:10","modified_gmt":"2025-08-29T10:50:10","slug":"what-is-a-token","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/what-is-a-token\/","title":{"rendered":"What is a token?"},"content":{"rendered":"
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1<\/span><\/p>\n

What is a token?<\/strong><\/p>\n

A token is a unit of account used to represent a digital balance in an asset. Tokens are recorded in a database based on blockchain<\/a> technology, and accessed through dedicated applications using digital-signature schemes.<\/div>\n<\/div>\n
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2<\/span><\/p>\n

What types of tokens are there?<\/strong><\/p>\n

\u2014 Equity tokens \u2014 represent a company\u2019s shares.
\n\u2014 Utility tokens \u2014 capture value within an online platform\u2019s business model (reputation, points for certain actions, in-game currency).
\n\u2014 Asset-backed tokens \u2014 digital claims on real goods or services (kilograms of carrots, an hour of a builder\u2019s work, etc.).<\/div>\n<\/div>\n
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3<\/span><\/p>\n

What can back a token?<\/strong><\/p>\n

Only asset-backed tokens are directly backed. In this case, the token is a digital twin of a real (physical) asset or service. For example, one token may equal one square metre of living space or a single cinema visit. The organisation that stores the goods or provides the services guarantees conversion of the token into its backing.<\/div>\n<\/div>\n
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4<\/span><\/p>\n

What is asset tokenisation?<\/strong><\/p>\n

Tokenisation is the process of transforming asset recording and management so that each asset is represented as a digital token. The point is to create digital counterparts to real-world valuables for faster, safer handling. For example, a bakery owner sets up an electronic ledger and issues digital claims on loaves \u2014 tokens. With a solid reputation, the owner can pre-sell loaves by selling tokens on online marketplaces. Any token holder can then come to the bakery and redeem one token for one loaf.<\/div>\n<\/div>\n
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5<\/span><\/p>\n

How does a token differ from a cryptocurrency?<\/strong><\/p>\n

Unlike cryptocurrencies, tokens can be issued centrally (run by one organisation) or in a decentralised way (governed by a preset algorithm). Transaction processing and acceptance can likewise be centralised (all servers controlled by one organisation). Token pricing may depend not only on supply and demand but also on additional factors (a peg to an external asset, conditional issuance or reward rules). Also, unlike cryptocurrencies, a token does not have its own blockchain.<\/div>\n<\/div>\n
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6<\/span><\/p>\n

How do you buy tokens?<\/strong><\/p>\n

You can buy tokens through online trading services (exchanges<\/a> and exchangers), or via private deals (where buyer and seller agree directly). The trading process is identical to that for cryptocurrencies. In addition, token issuers often embed purchase options on their project websites using traditional electronic payment methods.<\/div>\n<\/div>\n
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7<\/span><\/p>\n

Where do you store tokens?<\/strong><\/p>\n

For transfer and storage, tokens resemble cryptocurrencies. Dedicated wallet apps<\/a> are used to store and manage keys and to create and sign transactions. As a rule, these apps are part of the tokenisation platform\u2019s infrastructure.<\/div>\n<\/div>\n
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8<\/span><\/p>\n

What are the advantages of tokenisation?<\/strong><\/p>\n

\u2014 Speeds up trading, as real assets do not have to be moved and ownership paperwork is unnecessary.
\n\u2014 Improves storage and transfer security by recording transactions on a blockchain<\/a>.
\n\u2014 Reduces reliance on intermediaries, since their role can be codified in a smart contract or removed from the chain.
\n\u2014 Expands infrastructure functionality by adding modules (multi-factor authentication, invoicing, recurring payments, top-up cards).
\n\u2014 Improves usability, as many platform features can be integrated into a mobile app interface.<\/div>\n<\/div>\n
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9<\/span><\/p>\n

What advantages does blockchain bring to tokenisation?<\/strong><\/p>\n

\u2014 A robust database (verifying the integrity and authenticity of each subsequent system state).
\n\u2014 No single point of failure (transactions processed and accepted by many independent servers).
\n\u2014 Reliable auditability (an auditor can verify the correctness of the platform\u2019s entire change history).<\/div>\n<\/div>\n
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10<\/span><\/p>\n

What are the risks and challenges of tokenisation?<\/strong><\/p>\n

\u2014 Users\u2019 private keys can be lost or stolen by hackers \u2014 hard to predict or insure against.
\n\u2014 Preserving confidentiality on public blockchains is difficult, because transaction data must be open for verification.
\n\u2014 Scaling a decentralised ledger is hard, as such databases have strict throughput limits.<\/div>\n

This card was prepared with specialists from Distributed Lab<\/em><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

1 What is a token? A token is a unit of account used to represent a digital balance in an asset. Tokens are recorded in a database based on blockchain technology, and accessed through dedicated apps using digital-signature schemes. 2 What types of tokens are there? \u2014 Equity tokens \u2014 represent a company\u2019s shares. \u2014 [\u2026]<\/p>\n","protected":false},"author":1,"featured_media":37205,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"1","_short_excerpt_text":"A concise guide to tokens and tokenisation: types, buying and storage, benefits and risks.","creation_source":"human_written","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[2113],"tags":[2117,2115,1282,596],"class_list":["post-37204","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptorium","tag-101-altcoins","tag-101-technical-foundations","tag-asset-tokenization","tag-tokens"],"aioseo_notices":[],"amp_enabled":true,"views":"98","promo_type":"1","layout_type":"1","short_excerpt":"A concise guide to tokens and tokenisation: types, buying and storage, benefits and risks.","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37204","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=37204"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37204\/revisions"}],"predecessor-version":[{"id":37206,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37204\/revisions\/37206"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/37205"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=37204"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=37204"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=37204"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}