How Tokens Are Used

The most obvious use of tokens is as digital private currencies. However, this is only one possible use. Tokens can be programmed to serve many different functions, often overlapping. For example, a token can simultaneously convey a voting right, an access right, and ownership of a resource. As the following list shows, currency is just the first “app”:

Currency

A token can serve as a form of currency, with a value determined through private trade.

Resource

A token can represent a resource earned or produced in a sharing economy or resource-sharing environment; for example, a storage or CPU token representing resources that can be shared over a network.

Asset

A token can represent ownership of an intrinsic or extrinsic, tangible or intangible asset; for example, gold, real estate, a car, oil, energy, MMOG items, etc.

Access

A token can represent access rights and grant access to a digital or physical property, such as a discussion forum, an exclusive website, a hotel room, or a rental car.

Equity

A token can represent shareholder equity in a digital organization (e.g., a DAO) or legal entity (e.g., a corporation).

Voting

A token can represent voting rights in a digital or legal system.

Collectible

A token can represent a digital collectible (e.g., CryptoPunks) or physical collectible (e.g., a painting).

Identity

A token can represent a digital identity (e.g., avatar) or legal identity (e.g., national ID).

Attestation

A token can represent a certification or attestation of fact by some authority or by a decentralized reputation system (e.g., marriage record, birth certificate, college degree).

Utility

A token can be used to access or pay for a service.

Often, a single token encompasses several of these functions. Sometimes it is hard to discern between them, as the physical equivalents have always been inextricably linked. For example, in the physical world, a driver’s license (attestation) is also an identity document (identity) and the two cannot be separated. In the digital realm, previously commingled functions can be separated and developed independently (e.g., an anonymous attestation).