What are the Different types of ICO tokens

In the beginning Bitcoin was the only Cryptocurrency which introduced p2p system. Soon after that there was a huge increase in cryptocoins like Litecoin and Monero. In the last 2 years, Altcoins or Alternative Cryptocurrency reached its peak when Ethereum was introduced.

Most of the ICO were initially based on the Ethereum Blockchain and most of them still are based on the ERC20 standard based on Ethereum Blockchain. Somewhere in the middle “token” name was introduced for these “coins” and it meant that these tokens would have a different functionality than being a currency and would fulfill other requirements of the platform as well. they started coming up with wide variety of functions and according to the purpose a “token” serves, they have been assigned to these 5 groups-

1. The Utility Token

Some of the ICO advertise their tokens as Utility tokens which have a different purpose than just serving as a currency. You can use these tokens as the in-platform currency which you can use in purchases in the platform or use the services at a discounted rates. Like in KayoCredits Platform you can use the tokens for challenging other players or placing a bet on the dual outcomes and in Enjincoin Platform, you can use the coins to buy in-game assets from other players.

2. The Security Token

This token is similar to old fashioned stocks in which by buying tokens you become a partial owner of a company issuing tokens. This type of token is also known as equity token or tokenized security. This tokens serves as the stock after initial token sale has ended.

These tokens directly comes under security regulations and treated as a security against investment and usually placed under higher scrutiny than Utility Tokens

3. The Currency Token

This is the closest form of Cryptocurrency and its purpose is to use it to buy and sell assets and products on the internet or exchange money through online transfer. Just like Bitcoin, you can store these currency in digital wallets and trade them on exchanges for other tokens. You can also use these tokens to buy from the ICOs if they have an option for it.

4. The Reward Token

The primary purpose of the reward token is to reward someone for the skills, work or service. The amount of tokens rewarded as per the user standard on the platform. Like Steem rewards its users for writing posts on the platform and also ranks the according to the steem earned. However, investors are not much interested in these type of tokens as they hold no real value outside the Platform.

5. The Asset Token

This is a different token than security token as it represents the value of a real world asset or product, making it easier for a person to own shares in the real world asset like real estate, software, Gold or other valuable products. Unlike security token in which you are buying security (Financial) in a company, Asset token is provided on behalf of real world asset which may or may not act as a share for a company.

Now you know the basic difference between various Crypto tokens, you would be able to analyze ICOs clearly and make your decision on which tokens to buy.