What are Tokens?

Blockchain tokens are created from Smart Contract, an advanced feature of Blockchain. This enables users to create assets that transferable. Technically, everything that exists on Blockchain is data.

 

For example:

A creates a type of token Z that pledged to USD as a median of exchange. Token Z is actually recorded by a Smart Contract on Blockchain that verifies its value is always equal to USD. A actually does not create any physical assets, but a Smart Contract that records the existence of token Z, and tracks the movement of token Z, or even its ownership.

B accepts token Z and willing to trade some goods, or even fiat for token Z so that he can use token Z to achieve something else.  Then, they make a trade. In this case, value is created from thin air. The good thing is token Z cannot just disappear as everything is recorded on Blockchain in an order of time. It’s a trustless system as any movement is reported by Blockchain. Of course, B can send token Z to anyone he wants regardless of borders, or administration. That’s the strongest point of Token Z.

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