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Cryptocurrencies were introduced to the world as means of entertainment and as soon as they began to attain financial significance in society there was a huge rush in the online realm. Somehow, our li

What Are Crypto Tokens? A crypto token is a representation of an asset or interest that has been tokenized on an existing cryptocurrency's blockchain. Crypto tokens and cryptocurrencies share many similarities, but cryptocurrencies are intended to be used as a medium of exchange, a means of payment, and a measure and store of value. Crypto tokens are often used to raise funds for projects and are usually created, distributed, sold, and circulated through an initial coin offering (ICO) process, which involves a crowdfunding round. KEY TAKEAWAYS Crypto tokens are a digital representation of an asset or interest in something and are built on a blockchain. Crypto tokens can also be used as investments, to store value, or to make purchases. Cryptocurrencies are digital representations of value designed to facilitate transactions (making and receiving payments) using blockchain technology. Often purchased through an initial coin offering, crypto tokens are generally used to raise funds to develop projects.

History of Crypto Tokens

Although there were cryptocurrencies that forked from Bitcoin and Ethereum previous to the 2017 ICO boom, the first recognized ICO and token was Mastercoin. Mastercoin was created by J.R. Willet and announced on January 2012 via Bitcoin Forum. He titled his whitepaper "The Second Bitcoin Whitepaper."1 Mastercoin was one of the first projects to describe using layers to enhance a cryptocurrency's functionality. The project linked the value of Mastercoin to Bitcoin's value and explained how the project would use the funds to pay developers to create a way for users to make new coins from their Mastercoins. The ICO Boom Between 2012 and 2016, crypto token creation and ICO increased until 2017—token offerings skyrocketed as investors seemed to become aware of them and the possible increase in value they promised. Developers, businesses, and scammers began creating tokens rapidly in attempts to take advantage of the fund-raising boom—so much so that regulatory agencies began issuing alerts to investors warning them about the risks of ICOs.23

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