Formally, in the digital glossary, a token means a gadget or an array of symbols used to identify users.

To some extent, this “transcription” is also relevant for ICO/cryptocurrencies. The presence of certain tokens indicates that a person belongs to the project, it is a proof of his participation in something.

The functional description of digital tokens is much more interesting. They can simultaneously represent the following and have such characteristics as:

To have the purchase value — can buy some services for them;

To play the role of currency in a closed ecosystem;

To be an indicator of the share of the shareholder in some “enterprise”;

A significant indicator of something (number of gigabytes available for download);

A form of compensation for some actions.

That is, the token can be used as a reward tool in a certain game at the same time, as well as to be a unit of account.

This is one of the fundamental differences between the token and the crypto-coin. Cryptocurrency is designed for payments and transactions. That is, its main function is the purchase value. Tokens have a wider range of uses but on a smaller scale. In addition to being used to receive services and purchase certain goods, tokens can also form the basis of a loyalty program or represent a digital promotion.

At the same time, the cryptocurrency is circulating “in the external digital economy”. Tokens, at least initially, support the operation of a closed ecosystem. They don’t have a public wallet and blockchain like the main cryptocurrencies do.

Basically, there are 3 token types:

– Equity tokens;

– Utility tokens;

– Asset-backed tokens.

Equity tokens play the role of company shares. Utility tokens have some value and play a role in the work of the project (with their help, you can take part in the voting, set points for actions, etc.). Asset-backed tokens are the tokens whose value is backed up by real goods or services.

Today, there are several blockchain platforms on which tokens are issued.

Ethereum

The first thing that comes to mind after the decision to issue tokens is to use Ethereum for this.

Vitalik Buterin and his team developed their own PoW algorithm called Ethash. The consensus algorithm for Ethereum is a hybrid of PoW (proof-of-work) and PoS (proof-of-stake). In fact, it is a digital signature that ensures the integrity of the message, since the probability that one initial hash element is suitable for different messages is extremely small.

Pros: conducting the ICO on Ethereum, you can access a huge solvent audience. The number of registered accounts exceeds 5 million. Definite advantages: smart contracts, good documentation and high activity of the community and developers who can share their experience.

Cons: now Ethereum can conduct 3,200 transactions per second, and in July 2017 (during the peak of ICO popularity) a queue of those wishing to tokenize was gathered since the community did not have time to register transactions. From a technical point of view, the disadvantage is the need to learn the Solidity programming language. This is not a problem for developers but requires additional time and resources.

Waves

The product of the Russian programmer Alexander Ivanov caught up with the leader in a few months after the launch, but it will never overtake Ethereum. The developers initially relied on the PoS-Protocol, and later in the advanced version, they integrated the Leased PoS (LPoS).

This allowed dividing the nodes generating blocks into “light” and “full”, which increased the speed of transactions up to 10 thousand per second. Theoretically, this can reduce security, but the news about the vulnerabilities found in Waves is not heard, which can not be said about Ethereum.

Pros: speed is the main advantage of Waves, and this applies not only to transactions. Convenient services allow issuing a token without spending extra time.

Cons: Too closed community. It is almost impossible to find an intelligent consultant with practical experience, who will become a guide for a startup in the complex world of ICO, as well as get public answers to the most common questions. In addition, the token released on the Waves blockchain is illiquid for a wide audience. It is incompatible with the ERC-20 standard, which means that the token can only be traded on the internal Waves DX exchange (the trading volume on it is small), and the way to other cryptocurrency platforms is closed. The token released on Waves is simply not interesting for investors outside the site.

NEM

The developer of the Japanese platform NEM Lon Wong focused on the reputation of each account (the better the reputation — the higher the probability of block generation) and offered the PoI model (proof-of-importance) for the blockchain consensus.

It is not so demanding on computing power. NEM withstands up to 3 thousand transactions per second.

Pros: the ability to design client services on NEM basis and develop various business models. And you can use the algorithm without delving into the details of the technology itself, and even without an ICO. In addition, it is very profitable to create and exchange tokens on NEM.

Cons: the consensus requires a large network at the same time, which is not always easy.

Nxt

Frightened by many forks of Bitcoin and other popular blockchains, startups look to the PoS consensus algorithm (proof-of-stake). In its pure form, it was implemented in the NXT project back in 2013. One block of 1 BLN coins was issued on the platform, and the issue is over.

In February 2017, the developers launched a beta test of the Ardor platform for decentralized services of the second generation.

Pros: this platform n in BaaS-niche is easy, simple and fast. The user blockchain created on it becomes subsidiary, its transactions are delayed in the main chain for 24 hours, which plays in favor of the scalability of the network.

Cons: Nxt is popular mainly in Asia, primarily in Japan.

EOS

The platform offers a wide range of opportunities for fundraising for business projects. The recent EOS blockchain platform is based on the algorithm of asynchronous smart contracts. Due to the parallel execution of a large number of transactions, the system can carry out up to 100 thousand transactions per second.

This is a record for blockchains. Here, the consensus of DPoS (delegated proof of ownership) is applied, in which transaction verification is carried out by the selected “witnesses”. This reduces the number of links in the chain and increases the speed of transactions, but, according to skeptics, gives fraud opportunities for dishonest “witnesses”.

Pros: the EOS operating system provides solutions for planning, authenticating and building applications. Services allow you to fully focus on business processes, depriving startups of the headache of cryptography and blockchain. The project attracts by the ability to scale and the absence of user fees.

Cons: the community is quite skeptical about the developers’ statements about the fastest blockchain and almost unlimited possibilities, especially since EOS is just starting its work. The identity of the main developer, Dan Larimer, is ambiguous: he is the creator of the platforms Bitshares and Steamit, which insiders “minted” tokens in unlimited quantities.

From time to time, new projects appear that issue tokens on different blockchains. We at Guarda Wallet carefully treat tokens and cryptocurrencies that we add to the exchange and purchase at our services. At the moment, on the web and desktop clients, you can use tokens issued on the Ethereum blockchain. For Android, we offer wallets for Ethereum, Ethereum Classic and Qtum tokens, and Ethereum and Ethereum Classic tokens for iOS. You can find a full list of tokens and crypto-coins that can be used on different platforms on our website.