Do you know what is the definition of an Ethereum Token?
Ethereum is not just a currency but also an environment and this is its primary difference when compared to crypto currency. Through smart contracts in Ethereum anyone can take advantage of the block chain technology and construct their own DAPPS and projects. This is the main distinction as it exactly shows the correct scope of what can be conducted by Ethereum. Ethereum can be thought of as the internet and the website running in it the DAPPS. DAPPS are decentralized and they are not owned by an individual but by the people and this is the most interesting fact about it. This happens through crowd-sales known as the ICO. This basically means that one exchanges their ethers by buying certain tokens of that DAPP. These tokens have two varieties namely usage tokens and work tokens.
Usage of Ethereum Tokens act like indigenous currency in their respective DAPPS. A pretty good example of this is Golem. In order to have access to Golem services one has to pay with Golem Network Token (GNT). As much these tokens do have monetary value they do not guarantee one particular privileges or rights within the network.
Work Ethereum Token identifies an individual as a sort shareholder in the DAPP. For this reason an individual has a say in the projection that DAPP takes. DAO tokens are a perfect example of work tokens. One has the right to vote on whether particular DAPPS can get funded form the DAO or not get funded suppose one is a DAO token holder.
Importance of Ethereum Token
The main question being asked is why we don’t use Ether to transact within DAPPS if they are all made in the Ethereum Network and how is a native currency needed for them. The answer to this question is simple since tons of places use a form of token over cash in real life. A great example is how an individual visits the water park and has his wrist tied with a band in order to use services in the park. This example is a clear illustration of the water park being the DAPP and your money being ether while the band is the token. In a case where an individual buys movie tickets had as extra popcorn and coke in the ticket is another example illustrating that the cinema theater is the DAPP, the ticket is the token and money is the ether. In the smart contracts of the DAPPS one makes the process of buying tokens to execute certain functions much more seamless and simple. Additionally, for overall value of ether tokens become more preferred and powerful.
Standards in ERC20 Ethereum Token
A specific set of functions which developers must use in their tokens to ensure they are ERC20 compliant are the ERC20 standards. Most DAPP developers are encouraged to ensure that their Ethereum tokens can undergo interactions with various exchanges, wallets and smart contracts without any issues through following standards as much as this is not an enforced rule. With the knowledge and idea of how future tokens could change and become, this came as great news for everyone. Most DAPPS sold on ICOs have tokens and are based on ERC20 standards and the tokens have got widespread approval. Therefore generally a token needs six basic set of functions that are recognized and identified by other smart cards to be considered to be ERC20 compliant. When in execution these four basic activities are the requirements met in order to meet ERC token compliant: getting total token supply, having an account balance, transferring tokens from one party to another and approving the use of token as an asset monetarily.
Definition of an ICO
The crypto currency version of crowd funding is basically the crowd sales in an Initial Coin Offering. Amazing tasks and true revolutions have been accomplished by the ICOs, these include providing simple paths through which DAPP developers can access required funds for their projects and anyone could get engaged in a project by purchasing tokens of the particular DAPP. ICO works through the developer getting issued with a limited amount of tokens.
Read more on: What is classic Ethereum?
11 October 2017