Step by step Guide from A16ZCripto

From network tokens to Meme Coins, A16Z CRIPTO set a framework that will help companies move evolving crypto landscape.

What is the cryptocurrency? According to the Wikipedia, digital currency is designed to work through a computer network that “does not rely on any central government, such as a government or bank, supporting or maintaining it.”

And while at the very beginning of 2009. was one and only cryptocurrencies, called Bitcoin (Btc) Things have changed significantly since then. Now, over 12 million different tokens, according to data from the CRIPTO price price platform. But how are they different? There are memecoins, communal tokens, safety tokens and more. No wonder CRYPTO has become so complex.

“So, do you build a block-based project, investing in tokens or simply use them as consumers, it is essential to know what to look for. It is important that you are not confused, Memecoins with network tokens.”

A16Z CRIPTO

To help sort cryptic things, mile Jennings, Scott Duke Kominers and Eddi Lazzarin from A16Z cripto created the box For understanding the seven categories of tokens, they most often see the building of the entrepreneur. Below is the decomposition of these categories.

Network tokens

Network tokens are used to maintain a block or smart protocol contract. Basically, their value comes from the way network works. They usually have a clear purpose, such as helping network operations, forming consensus, upgrading protocol or rewarding certain actions within the network.

As A16Z CRYPTO explains, these networks, where token, usually feature characteristics such as “program purchases, dividences and other changes in the total intake of the token or ignition to enter inflationary and deflational networks in the network service.”

Network tokens depend on trust. And in this aspect, A16Z Cripto says these tokens are “similar and goods and securities.”

“Recognizing this, both SEC Framework and FIT. Years, they have given network tokens from US security laws when reliable addiction mitigates the decentralization of the basic network.”

A16Z CRIPTO

These tokens are used to start new networks, distribute ownership or control and store the network. The brightest examples are Bitcoin, Etherum (El), Solana (Salt), Unisvap (Uni) and Doghoin (Exaggerate).

Security tokens

Although network-tokens can be made as securities, safety tokens are actually digital versions of traditional securities, such as companies or corporate bonds. They can also have special features, such as giving interest in LLC or rights to future payments from lawsuits.

Although securities provide special rights, titles or interests, and the issuer often controls the risk of assets, these tokens will continue to be under American laws of securities, as the A16Z CRIPTO expires. Although these tokens are not as common as network tokens or memes, they are still used to collect money for business ventures.

For example, Etherfuse Stablebonds and Aspen Coin gave people fractional ownership at the resort St. Regis Aspen.

Tokens that support companies

The tokens that support the company are related to the application, product or service or service of a company or centralized organization.

Like network tokens, tokens that support the company can use blockchain and smart contracts (eg to facilitate payments). However, they primarily serve operations outside the chain, not online ownership. As a result, the company has more control over the issuance, communal services and token values.

Although these tokens do not give a defined right or name such as traditional securities, they still have entrusted depending on securities.

“Their value is inherently dependent on a system that controls a person, a company or managerial team.”

A16Z CRIPTO

For this correct reason, the tokens that support the company could be subject to securities laws when they attract investment, analysts warn. Historically, the company supported to the company was used to detour securities laws in the US, acting as a proxy for capital or profit interests in companies.

For example, examples include (Fttt), which was interest in profits for the infamous FTX exchange. Binance coins (Bnb) Whether another example of the token supported the company who has moved to a network token after starting the BNB chain.

Arcade Token

Arcade tokens are primarily used in the system and are not intended for investment, explains A16Z CRIPTO. These tokens often serve as currencies in virtual economies Digital gold in the gameLoyalty points for membership program or loans for digital products.

What makes arcade tokens is unique that they are designed to discourage speculations. They can have a unstressed supply – which means an unlimited number can be minted – and / or limited transmission.

How Cripto points out this, these tokens can even “expire or lose value if not used or can only have a monetary value and utility in the system in which they are issued.” As a rule, arcade tokens do not promise financial returns, which makes them relatively secure from American laws on securities.

Examples include Flying, Loyalty Token Restaurant Blackbird Restaurant Networks and Pocket Quarters, Property in the game that has been relieved of American securities and exchange commissions in 2019. Years.

Collectible tokens

One of the most famous types of tokens are collectors. They can represent things like artwork, music piece or even concert tickets. But for the public, they are most often known for another name – NFTSor non-fungal tokens. And while the NFTS may seem like another speculative bladder, these tokens can really benefit in certain contexts.

“Collector’s token can function as a license or card for an event; it can be used in video game (such as that sword); or could provide property rights in relation to intellectual property.”

A16Z CRIPTO

Since the collected tokens mainly relates to finished goods and do not rely on efforts on third parties, they are usually excluded from American laws on securities, A16Z CRIPTO NOTES. Are probably famous NFTS Bored Ape Yacht Club and Cryptopunks.

Tokens that support property

Tokens that support property receive their value from the requirements for basic assets. For example, goods, fiat currency or even digital means such as cryptocurrency.

These tokens can be fully or partially collateralized and they serve various purposes, such as action as values ​​of values ​​or protection instruments. However, unlike collectible tokens, which encourage value from ownership of unique goods, tokens that supported property more as financial instruments. Crypto according to A16Z, “Regulatory treatment of tokens that support property, however, depends on their structure and use”.

Examples include stableCoyne subject to a fiat such as a crush coin for USD (USDC), Liquidity providers tokens like C-token compounds or derivative tokens such as descriptions of squeezes.

Memecoins

And then we have memecoins – Probably the most famous. These are like the top of the internet chaos. They really don’t do anything useful and are generally all about memes or everything that continues to roll over in the community. Their basics? Forget it. Everything is in speculation and everything that the market feels, which means that they are super easily manipulated or withdraw mats.

Because they are wild, the memories are generally excluded from the American laws on crypto, noting that they are still virtue or actual use, and their prices can be swinging them as quite non-in-and-in-law. Some famous include Pepe (Pepe), Shiba Inu (Shib) and a new official trump (Abdomen) Memecoin connected US President Donald Trump.