What is a cryptocurrency token and why is it needed?

Tokens are digital representations of assets or rights that can be exchanged or transferred on a blockchain.

Tokens have many uses:

• Application users purchase tokens as internal currency and use them to pay for services or goods in the blockchain system.
• Financing. Tokens allow you to invest legal tender (“physical”) in highly liquid cryptocurrency projects. Tokens can be used as a means of financial transactions with a guarantee of a certain income over time;
• ICO. By issuing tokens, anyone can invest in a start-up company and receive a guaranteed share of the total cryptocurrency revenue and transaction commissions of the payment system. Unlike a traditional initial public offering, ownership of blockchain shares does not give you the right to participate in the management of the company (unless otherwise agreed).

The Ethereum cryptocurrency platform is the first of its kind where tokens are issued by users. It is a decentralized virtual machine based on smart contracts.

Tokens can also be issued on cryptocurrency platforms such as Waves, NEM, Nxt and EOS. Each of these platforms has its pros and cons, but overall they are proven tools for issuing your own tokens.