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Token

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A token is a type of crypto asset used within blockchain ecosystems for economic, governance, or other purposes. Unlike cryptocurrencies, which operate within their own blockchains, tokens are developed on the blockchains of other cryptocurrencies.

Tokens are commonly created through fundraisers such as initial coin offerings (ICOs) and are typically designed to have some form of utility. While there are various ways to use a token, some popular token types include utility, governance, security, and non-fungible tokens (NFTs).

Utility tokens grant users access to products and services within the crypto ecosystem;

Security tokens function as quasi-shares and derive their value from tradable external assets;

Governance tokens are employed by decentralized autonomous organizations (DAOs) to make decisions about blockchain functionality;

Non-fungible tokens (NFTs) are unique assets often linked to visual or audiovisual files.

Each type of token may be subject to different degrees of regulation depending on its use. The regulations relevant to security tokens may not apply to NFTs, and vice versa.

Blockchain startups often distribute tokens to attract investors and cultivate a sense of exclusivity. Token holders may enjoy certain privileges, such as contributing to blockchain governance or gaining early access to new products.

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