Blockchain technology has enabled a new software paradigm for managing digital ownership in partial or zero-trust environments.
It uses tokens to conduct transactions, exchange verifiable data, and achieve coordination across organizations and on the web. Data models with varied capabilities and scopes have been defined to issue tokens.
By allowing for the design of programmable digital assets that can represent different forms of ownership, these models enable users to store, move, and even create value on top of shared or public digital infrastructures.
Fundamental to this representation is that users can independently control token custody in digital wallets through public-key cryptography and interact with one another in a peer-to-peer manner. Blockchain networks provide secure transaction reconciliation, linkage, and storage in consolidated, integrity-protected distributed ledgers.
Additionally, blockchain networks form mutually operated record-keeping execution environments, or virtual machines, for smart contracts, which are built with application-specific instruction sets or general-purpose programming languages.
These environments make it possible to issue programmable digital assets or tokens, the ownership of which is cryptographically verifiable, and to develop services to help manage them.
Tokens are either native to a blockchain protocol or deployed on top of an existing blockchain protocol via user-generated logic at the smart contract layer. Fungible tokens are meant to be completely interchangeable, serving as digital coins and enabling payment systems.
They are primarily used to build incentive and governance models for permissionless peer-to-peer networks, represent existing fungible assets, or derive financial instruments. On the other hand, tokens associated with unique identifiers are meant to uniquely identify things or data.
Tokens can be implemented on-chain (i.e., nonfungible tokens) or as self-contained tokens that use blockchain-based storage for status updates. Self-contained tokens enable authentication and authorization methods that can provide additional features for blockchain-based tokens or help build identity or supply chain management systems.
These two types of uniquely identifiable tokens can either be native to a blockchain-based protocol or represent existing assets such as physical objects.
Want to learn more? Tonex offers Blockchain Networks Token Design and Management, a 2-day course that provides a high-level technical overview and conceptual framework of token designs and management methods.
The course is designed and built around the National Institute of Standards and Technology (NIST) five views: the token view, wallet view, transaction view, user interface view, and protocol view.
For more information, questions, comments, contact us.