From network tokens to meme coins, A16Z Crypto has prepared an outline to help navigate the crypto landscape that develops businesses.
What is cryptocurrency? According to the definition of Wikipedia, it is a digital currency designed to work through a computer network that “no central authority, such as the government or bank, is not dependent on maintaining or maintaining it.”
And initially in 2009 there was one and only cryptocurrency, called bitcoin (BTC), things have changed a lot since then. Now, the crypto value per data from the price aggregator platforms, more than 12 million separate tokens. But how to separate them? Memcoin, utility tokens, safety tokens, and many more. No wonder Crypto has become so complicated.
“So, whether you are constructing a blockchain-based project, investing in tokens, or simply using them as a consumer, it is necessary to know what to see. For example, it is important not to confuse, not to confuse memecoin with network tokens.”
A16Z crypto
To help solve crypto things, Miles Gennings, Scott Duke Cominners, and A16Z Crypto from Eddie Lazarin Created an outline To understand the seven categories of tokens, they see entrepreneurs the most often. Below is the breakdown of these categories.
Network tokens
Network tokens are used to keep blockchain or smart contract protocols on. Originally, their value comes from how the network works. They usually have a clear purpose, such as helping in network operations, creating a consensus, upgrading protocols, or rewarding some tasks within the network.
As the A16Z Crypto states, these networks, where tokens remain, usually have characteristics such as “programtic buybacks, dividends, and other changes for the total token supply or other changes for the total token supply or burning of inflation in the service of the network.”
Network tokens depend on trust. And in this aspect A16Z Crypto says that these tokens are “similar to both objects and securities.”
“Recognizing this, both SEC’s 2019 framework and FIT21 are provided for network tokens, excluded from the laws of American securities when those trust dependency is reduced through decentralization of the underlying network.”
A16Z crypto
These tokens are used to launch new networks, distribute ownership or control and protect the network. The most bright examples are bitcoin, atherium (eth), solana (sol), uniswap (uni), and dogcoin (dogi).
security token
While network tokens can look like securities, safety tokens are actually digital versions of traditional securities, such as company shares or corporate bonds. They may also have special features, such as paying interest interest in LLC or the right to pay future settlement from cases.
While securities give the holders specific rights, titles or interest, and the issuer often controls property risk, these tokens will still be subject to American securities laws, as the A16Z Crypto describes. Even though these tokens are not as normal as network tokens or memecoins, they have been used to raise money for professional enterprises.
For example, the etherfuse stabalbonds and the aspen coins gave partial ownership to the people at the St. Razis Aspen Resort.
Company-supported tokens
The company-supported tokens are associated with an off-chain application, product or service run by a company or centralized organization.
Like network tokens, company-supported token can use blockchain and smart contracts (eg, to facilitate payment). However, they serve off-chant operations primarily rather than network ownership. As a result, a company has more control over the ongoing, utility and value of tokens.
Although these tokens do not provide a defined correct or title like traditional securities, they still have faith dependence for securities.
“Their value is naturally dependent on a system that is controlled by a person, company or management team.”
A16Z crypto
For this accurate reason, company-supported tokens may be subject to American securities laws when they attract investment, warning by analysts. Historically, a company -backed tokens have been used to bypass the laws of securities in the US, which serve as a proxy for the interests of equity or profit in companies.
For example, examples include (FTT), which was an advantage interest in the notorious FTX Exchange. Binance Coin (BNB) is another example of a company-supported token that infection in a network token after the launch of BNB chain.
Arcade token
Arcade tokens are mainly used within a system and are not for investment, the A16Z Crypto explains. These tokens often serve as currencies within virtual economies, such as digital gold in a game, loyal points for membership program, or credit for digital products.
Arcade makes the token unique that they are designed to discourage speculation. They may have an unkapped supply – which means an unlimited number can be mined – and/or limited transferable.
As the A16Z Crypto states, these tokens can also “eliminate or lose value when unused, or they can only have monetary value and utility within the system in which they are released.” As a rule, arcade tokens do not promise financial returns, which makes them relatively safe from American securities laws.
Examples include fly, loyalty tokens for the blackbird restaurant network and pocketful of quarters, an in-game asset, which was relieved from American Securities and Exchange Commission in 2019.
Collectable token
One of the most famous types of tokens is collectible. They can represent things such as art work, pieces of music or even a concert ticket stub. But for the public, they are usually more and more known by a separate name-NFTS, or non-fangbal token. And while NFT may look like another speculative bubble, these tokens can actually be utility within specific references.
“A collectible token can act as a license or ticket for an event; Can be used in a video game (like that sword); Or can provide ownership rights in relation to intellectual property. ,
A16Z crypto
Because collectible tokens are generally related to finished goods and do not rely on third party efforts, they are usually excluded from American securities laws, A16Z crypto notes. Eminent NFTs are probably bored app yacht clubs and cryptopanks.
Asset-assigned token
Asset-supported tokens obtain their value from a claim on underlying assets. For example, objects, fiat currency, or even digital property such as cryptocurrency.
These tokens can be perfectly or partially collateral, and they serve various purposes, such as acts or acting as a reserves of hedging equipment. However, unlike collective tokens, which receive value from the ownership of unique items, asset-supported tokens do more like financial instruments. According to A16Z Crypto, “regulatory treatment of asset-supported tokens, however, depends on their structure and use.”
Examples include the circle’s USD coin (USDC) such as fiat-supported stabechoin, liquidity provider tokens such as compound’s C-tokeons, or derived tokens such as Opin’s squeeze.
Memcoins
And then, we have found Memcoin-Perhaps the most famous ones. These internet are like the peak of chaos. They do not really make anything useful and mostly all the memes or whatever communities are going on. Their basic principle? forget it. All this is about speculation and whatever market feels, which means that they are super easy to manipulate or get a ruckus.
How wild they are, Memcoin is “generally excluded from American securities laws, as A16Z Crypto says, although given that they are still” anti-fraud and market manipulation laws. ” Does make them stand out? They have received zero purpose or real use, and their prices can swing like crazy, which makes them too much no-goes for investment. Some famous people include Pepe (Pepe), Shiba Inu (Shib), and new official Trump (Trump) Memcoin who are associated with US President Donald Trump.
