Ethereum is undoubtedly one of the most amazing decentralized platform. It has its own blockchain and the Ethereum coin as the main commodity of the platform. Folks usually call it as Ether.
Just like Bitcoin, Ethereum uses a blockchain data structure. The difference here is that Bitcoin has its own currency in the ecosystem, which is called as Bitcoin. Ethereum has different coins.
Many people hardly understand the tokens. The confusion has been increasing since the ETH Token used for the ICO. You may have heard the ETH Token many times. Before going further with this, let’s take a look at the “token” definition first.
Token is the asset which can be traded by the currency, points, gold certificates, physical goods, digital products, and many more. We’d like to separate the Token with THE first. It is because the idea of a token itself is not only exclusive to Ethereum or Bitcoin platform. Rather, this is an abstract idea. It represents the tradable asset. And yes, the ETH Token has its own value in the market.
We can’t deny that most recent times have been stopped by the Ethereum participants and enthusiasts. The flexible platform has opened the windows of opportunities for all creators to make their own ICOs.
The most interesting occasion of the ICO – Initial Coin Offering is the tokens themselves. The tokens represent the tradable stuff for access to digital service in the project.
For instance, there is a new project that pays the developers who publish on the platform. They will use the new token. Let’s call it as token “A”. And you only have the ETH Token. Meanwhile, in this new project, token “A” is the medium of exchange in it. So if you want to transact in the “A” ecosystem, you will need to own token “A”. You might purchase it with Dollars or your local currency. But you can also purchase it with another digital token, like THE Token. The ETH Token can be traded with this token “A” at a specific price.
Let’s analogize it with the real life. You want to escape your hectic day and go to the game center nearby your home. You want to play the dingdong game with your pals. So, you will need the coins to play. In order to participate to the dingdong game, you will need to exchange your centralized currency, let’s say USD, to the coins/tokens to use the service (the dingdong game).
Using that analogy, you can imagine purchasing the usage token “A” (as mentioned in the example) using cryptocurrency like THE Token (or flat) to use the different services in the specific project ecosystems.