Ethereum and tokenization

by Lumai Mubanga

The three biggest blockchains have different approaches to tokenization. The Ethereum and bitcoins blockchain hold tokens while the Hyperledger does not. What is the purpose of some tokens on the Ethereum blockchain? How does it differ from other tokens?

ECRs

The Ethereum blockchain holds a number of tokens. Among these are the ECR 20, ECR 71 and ECR1400. ECR tokens are a vehicle built on the blockchain to create value. Each token has its own specifications and functions on the blockchain. The first token most popular on the Ethereum blockchain was the ERC-20. The ERC-20 is able to hold values, move value from one place to another, from one contract to another, and from one user to another. Now the standard token guides developers to create standardized applications different types of ERCs are available, each with its specific function. Think of tokens as a different vehicle designed to carry out different functions. For example, a bus, a family car, a pickup light truck and a taxi are all vehicles. However, each one is designed differently for its own purpose. So are tokens on the Ethereum blockchain.

Fungible Tokens

ERC-721, ERC-1400, and ERC, have very specific features and very specific properties. Therefore, ERC- 721 for example, is a type of ERC, which cannot be divided. It exists in a very limited number of units and it cannot divided. Therefore, ERC-20 is an example of a fungible token. In short, fungible tokens means if I give you one token and you want to share half of it with someone, you can divide it in two, send 0.1 Ether to someone, and send 0.3 to someone else.

Non-fungible

Some tokens are called non-fungible. If you possess a non-fungible token, it’s one token only. Some tokens have properties that can only be exchangeable between accredited people. If I want to sell company shares, for example, you can only exchange company shares with individuals of above a certain age limit who qualify to own shares.

In this way, tokenization has brought about a way to create programmable money and programmable vehicles. That explains why the ECR -20 token has taken significant importance in standardizing smart contract compliance designs.

In conclusion, you can own, share a token. Each token has its own specifications, and these specifications give it unique properties for different application. Therefore, the most popular is the ERC-20, but since its birth, there are hundreds of different type of tokens, which comes with all different specifications. Blockchain is thus like huge infrastructure undertaking with different vehicles designed for different purposes. That’s what a token is.