Crypto world of terminologies

·????????A Token is a cryptographically secured digital representation of value, rights or obligations, which may be issued, transferred and stored electronically, using Distributed Ledger Technology (DLT) or other similar technology.

·????????A Crypto Token is a Token that is used, or is intended to be used, as a medium of exchange or for payment or investment purposes but excludes an Investment Token, or any other type of Investment, or an Excluded Token.A Crypto Token includes a right or interest in the relevant Crypto Token. Excluded Tokens,” and they will consist of Utility Tokens, NFTs and Central Bank Digital Currencies (CBDC).

·????????Cryptocurrencies are a type of Crypto Token designed to be used as a medium of exchange, giving the holder either no, or limited, rights for a claim against the creator/offeror. Cryptocurrencies are usually a co-product of their native blockchain, where a certain consensus mechanism is used to validate transactions on the blockchain. As a result of the consensus mechanism, additional blocks are added to the chain, where the validators are rewarded with additional Cryptocurrencies (e.g., process of mining).2 Examples of Cryptocurrencies include Bitcoin, Ethereum and Solana.

·????????Some Cryptocurrencies may not have their own blockchain, in which case they “piggyback” on an existing blockchain, using the smart contract and endogenous computation functionality of the hosting blockchain. An example of such a platform with its own Cryptocurrency is Ethereum, examples of other Cryptocurrencies using that network are Polygon and Chainlink.

·????????Hybrid Utility Tokens are Crypto Tokens that share some characteristics with Cryptocurrencies, but can also provide certain rights to the holder, usually in the form of discounts and early subscription options on products and services offered on that blockchain.

·????????The most common Hybrid Utility Tokens are created by a trading facility whereby the holder is entitled to discounts on trading fees and commissions. Hybrid Utility Tokens can be created and offered to the public directly through an Initial Token Offering (ITO), where the funds raised are used to develop the blockchain product or service. Examples of a Hybrid Utility Token include Filecoin, Huobi Token and Basic Attention Token.

·????????Asset Referenced Tokens are a type of Crypto Token that, in order to maintain, or reduce volatility in its price, has its value determined by reference to a single fiat currency, another Crypto Token, a commodity, or any other combination of assets.

·????????The most common type of Asset Referenced Tokens are Fiat Crypto Tokens, which have their value pegged one-to-one against a fiat currency, usually the US dollar. As we discuss later in the CP, certain Fiat Crypto Tokens that meet our proposed criteria will be considered Accepted Crypto Tokens, which can then be used for providing Financial Services in or from the DIFC.

·????????Utility Tokens are a type of Token that have a specific use case within a closed ecosystem. These can be used by the holder only to pay for, or receive, early access or discount on a product or service (whether current or proposed), and the product or service is provided by the issuer of the Token or of another entity in the issuer’s group.

·????????Non-fungible Tokens A NFT is a type of unique Token that relates to an identified asset (e.g., art, a collectible, other object of intellectual property) and is used to demonstrate the ownership or provenance of that asset. While these types of Tokens can be traded in various marketplaces, and be accumulated speculatively, they are not readily interchangeable and the relative value of one NFT to another, each being unique, cannot be ascertained by means of comparison to an existing market or equivalent assets.

·????????Central Bank Digital Currencies - A digital representation of a currency issued by a government, for example, is commonly referred to as a CBDC

·????????Privacy Tokens and Devices are used, or have features that are intended to be used, to hide, anonymise, obscure or prevent the tracing of the holder of a Token, a transaction relating to a Token or the parties to a transaction. All these features make it virtually impossible to identify accurately the holder or beneficial owner of a Token or to trace a chain of transactions.

·????????Algorithmic Tokens are designed to achieve price stability through balancing the circulating supply of the Token. This usually entails behind-the-scenes corrections to the supply and demand inputs to arrive at higher or lower equilibrium points. In other words, these Tokens use a method which can issue more coins when its price increases and buy them off the market when the price falls.

·????????DeFi applications, which allow direct peer to peer activity, some of which could involve Financial Services, without intermediation, and the provision of offerings and products that closely resemble products and services in the traditional financial marketplace, through the deployment of software code. For example, there are applications, or dApps, running on blockchains, that enable users to obtain an asset or loan upon posting collateral. Others offer the ability to deposit a Crypto Token and receive a return.