Understanding Cryptoassets
Cryptoassets utilize cryptography, consensus algorithms, distributed ledgers, peer-to-peer technology, and smart contracts to serve various purposes, such as being a store of value, medium of exchange, unit of account, or decentralized application (DApp).
Within the realm of crypto assets, there are four primary types:
- Cryptocurrencies
- Utility tokens
- Security tokens
- Stablecoins.
Exploring Cryptocurrencies and Decentralized Ledgers
Cryptocurrencies, essentially autonomous assets, can be transacted among network participants and operate using blockchain technology.
A blockchain acts as a decentralized ledger, recording and updating all past transactions associated with a specific cryptocurrency.
This ledger is maintained through consensus mechanisms like proof-of-work or proof-of-stake.
Enabling Access and Services
Utility tokens, although not technically considered coins as they do not possess their own blockchain, rely on the underlying blockchain of the platform they are built on, such as Ethereum or EOS (EOS).
Utility tokens derive their name from their ability to provide access to specific products or services.
For instance, Storj (STORJ) enables users to pay for decentralized storage space on its network.
While utility tokens can be used for exchange, it is not their primary purpose.