In this blog post, we are going to discuss What is a tokenomics coin? and what are the related terms in the coin Tokenomics and where to invest?
One of the main uses of blockchain technology is crypto-tokens, which are units of value that can be exchanged and hold a certain value but they are a completely different digital asset class, there are different crypto coins are based on it.
There are currently over 1,000 different types of cryptocurrencies, so it’s hard to tell if an ICO has real potential or if it’s just another blatant attempt at money-grabbing from companies who really don’t have anything to offer in return.
Related Article: Tokenomics Crypto: Top 11 Projects
What is Tokenomics coin(s)?
What is tokenomics and how does it differ from cryptocurrency, or from stocks and bonds? Tokenomic tokens are coin(s) that are intended for use on a blockchain protocol.
Whereas cryptocurrencies such as Bitcoin (BTC) can be used as a currency on most mainstream eCommerce platforms.
There are different types of crypto coins depending on their structure and each kind has its own name for example Utility Tokens, Equity Tokens, etc.
Related Article: What is Tokenomics? – Guide on Crypto & Tokens
Why Invest in Crypto Coins?
In tokenomics, crypto tokens or coin(s) are units of value that blockchain-based projects build on top of an existing blockchain.
There are different crypto coins are based on it from which you can choose any platform depending upon your choices.
Therefore, choosing a platform for investment in Tokenomica’s coins is tough as many new platforms offer ICO (Initial Coin Offering) nowadays.
Crypto tokens also called crypto coins are digital assets that can be used as a medium of exchange, they’re not controlled by any central authority like a bank, but rather decentralized through blockchain technology.
This means it’s nearly impossible for hackers to break into an individual account and steal someone’s money.
Crypto coins like Bitcoin and Ethereum operate on an open-source protocol which makes them transparent.
Related Article: Is it better to buy Ethereum or Bitcoin?
Initial Coin Offerings(ICOs)-How Tokens Issued?
Initial Coin Offerings (ICOs) is a way for blockchain projects to raise capital. An ICO is an occasion wherein another digital currency project offers part of its digital currency tokens to early adopters and devotees in return for cash today.
This is typically done via Ethereum smart contracts by distributing tokens that have specific use cases on their platform.
Many ICOs issue coins or tokens on a blockchain, which provides access digitally to products or services offered by that company.
Today, Initial Coin Offerings (ICOs) is a common way for blockchain projects and startups to raise money.
The ICO has become so popular, that it’s been compared to an IPO – Initial Public Offering, when companies go public with their stock.
You may have heard about ICO scams lately, or you might not know what an ICO is at all.
Different Tokenomics based Coin(s)
There are huge amounts of Tokenomics based Coins available in the market like Bitcoin, Ethereum, Monero, Litecoin, and many more.
There are so many coins built on different blockchains out there, Every new and exciting blockchain technology that pops up leads to a flood of new ICOs coming out after it, trying to utilize their underlying technology for all sorts of things.
One key thing to remember about investing in ICOs is that you want value for your money which means you need a good token market cap value and liquidity.
What Should You Consider Before Buying Tokens?
Before committing to buy tokens, you should carefully research what a token actually is. Simply put, tokens are units of value (sort of like cryptocurrencies) that blockchain-based projects build on top of an existing blockchain.
For instance, there’s a project called Filecoin; they have built their project on top of Ethereum and raised $257 million by selling off Filecoin tokens.
Today, those Filecoin tokens can be exchanged and hold a certain value but they are a completely different digital asset class than Bitcoin or Ether because they were created specifically for use with one application (in their case, cloud storage).
P2P Marketplaces and Tokenomics coin
When it comes to investing in cryptocurrencies, many companies try to sell utility tokens and use tokenomics coin(s) as a form of payment for their products.
But what is tokenomics? What is a utility token and what is different about it when compared with a security token?
One of the keys used for cryptocurrency tokens is as value exchange mechanisms between different people on platforms that exist on top of existing blockchains.
One example of a platform using tokenomics is Origin, a decentralized marketplace for sharing services.
On Origin, users can earn and spend their shareable reputation (Origin Shares), which they receive by providing or booking services through their reputations on other networks like Facebook, Twitter, and Reddit.
In turn, these shares are verified with Ether nodes and tradeable within any service provider’s network.
The goal of Origin is to allow anyone to create decentralized marketplaces similar to what Uber did for taxis.
But unlike Uber, a transaction fee isn’t charged; instead, payments are made in ETH every time someone books another person’s services.
Investing in Crypto Over Mutual Funds or ETFs
The main advantage of investing in cryptocurrencies rather than mutual funds or ETFs is that investors can obtain a substantial upside with less risk.
If you’re interested in diversifying your portfolio, but you don’t want to choose individual stocks, then cryptocurrencies are an excellent option.
Why? Because they offer more ways to make money and keep risk at bay. With cryptocurrencies, you have exposure to many different blockchain-based projects (or altcoins), which lowers your chances of losing all of your investment capital.
Investing in cryptocurrencies will likely yield much greater returns than putting money into any traditional investment vehicle such as stocks or bonds. In other words, Cryptocurrencies Could Make You Wealthy Today.
How Do I Buy Tokenomics coin?
Cryptocurrencies are digital tokens that are built on top of a blockchain, To buy Bitcoin or other cryptocurrencies, you will need to set up an account with a cryptocurrency exchange platform.
There are numerous exchanges out there, but you’ll probably want to use one based in your country so that you can avoid currency conversion fees when buying and selling cryptocurrencies. Some good ones include Coinbase, Bitstamp, and Kraken.
Tokenomics based Stable Coins
Ethereum is working on two different types of tokens that will be used on their platform. They call them usage tokens and utility tokens.
A usage token is a token that you pay for goods or services, like a taxi ride or rent fees. These are also referred to as application-specific coins (appcoins).
Utility tokens, however, do not grant access to anything else but tradeable on an exchange.
For example, Ether itself acts both as a currency and an enabler to run applications on top of Ethereum’s blockchain.
These can be categorized into two main groups: stable coins and security tokens. Stable Coins When it comes to stable coins these aim at minimizing volatility by pegging themselves to one single fiat currency or commodities, such as gold or oil.
Tokenomics based Alt coin
In a lot of cases, these tokens have value because they allow people who hold them to access a particular service or project.
For example, Ethereum is an application platform that uses gas (ether) as a unit of exchange.
This means ether has real-world utility and value on top of just being a store of value. These units are what are referred to as crypto tokens which can be bought and sold on exchanges.
An altcoin refers to any digital currency other than Bitcoin, like Ethereum, Litecoin, Zcash, and Monero.
That said some projects such as Lisk don’t use blockchain technology and might not even use any crypto coins; rather their digital currency is built into their blockchain system i.e., not external or tradable.
With so many cryptocurrencies currently available for trade or investment, it can be hard to know where you should start.
How to Store Crypto Coins for Long-Term Investment?
In order to store your cryptocurrencies for the long term, you will need a cold storage wallet.
Storing them online on exchanges is not safe as you can be hacked or lose your password.
That’s why storing coins offline on paper wallets or USB wallets is a safe way of keeping them for the long term.
It is advisable to use hardware devices like Ledger Nano S and Trezor which have high standards of security.
You should also update its software regularly and only connect it to your PC when required.
It is also important that you choose a strong password (at least 10 characters) for your account when buying and selling cryptocurrencies at cryptocurrency exchange sites so that you don’t get hacked.
Tokenomics and Crypto coin
Token value is based on supply and demand, Crypto tokens are a completely different digital asset class and they can be exchanged and hold a certain value.
Tokens are simply a representation of an asset or utility and not necessarily backed by an actual product.
There are many different types of tokens such as security tokens, equity tokens, currency coins, and smart contract-based coins which enable new use cases from decentralized cloud storage, payments, remittances, etc.
One type of token that has been garnering significant attention recently is utility tokens, which represent access to products or services instead of ownership interests.
These crypto-tokens do not entitle investors to any rights other than using their product/service.
Conclusion
Tokenomics is a new frontier for blockchain startups and investors. If you want to contribute or raise capital by issuing your own token, it’s a good idea to speak with an attorney about incorporating tokens and working with other blockchain projects.
In many cases, your token can be security (if it represents ownership of stock) or be exempt from securities laws entirely.
For more details on regulatory issues, check out our guide to tokenizing securities. You should also consider speaking with tax attorneys on how best to structure and issue your own coins so that you don’t end up paying exorbitant taxes or being accused of tax fraud!
Meet Nitin, a seasoned professional in the field of data engineering. With a Post Graduation in Data Science and Analytics, Nitin is a key contributor to the healthcare sector, specializing in data analysis, machine learning, AI, blockchain, and various data-related tools and technologies. As the Co-founder and editor of analyticslearn.com, Nitin brings a wealth of knowledge and experience to the realm of analytics. Join us in exploring the exciting intersection of healthcare and data science with Nitin as your guide.
