Cryptocurrencies are perhaps the most profitable investment of the last decade. But, in recent years, there have been so many new digital currencies that supply has exceeded demand, and the price of most of them has stopped increasing.
It’s time to invest in blockchain tokens — a digital analog of ordinary shares for investments in IT projects. Thus, the key question of our today’s article ‘How much is a token worth?’. Let’s try to find out!
How Much Is 1 Token Worth: Key Properties of Tokens
So, how much is 1 token worth? Well, let’s start with a definition first. How was mentioned before, a token is an analog of shares on the stock exchange. They are issued to attract funding to IT startups as part of an ICO procedure, lending, and monetizing additional services for IT project participants. Tokens usually have the following properties:
- attest to a share of shareholder rights in an IT project;
- can act as a reward (bounty), for example, for helping to attract investors to a startup through the placement of project advertisements, etc.;
- play a role of currency in a closed (IT) system — they can be used to purchase services of a project.
So, the use of a token is limited to the specific startup that released it. As soon as an IT project goes public, its tokens can be easily exchanged for cryptocurrency, for example, Bitcoin. Thus, it’s impossible to convert 1 token directly into USD or another currency. This can only be done through an intermediate link in the form of a digital currency — BTC or ETH, for example.
Thus, how much is 1 token worth in USD or another currency is determined by the interaction of supply and demand for it in the market. It also depends on the success of an IT startup and the usefulness of its services. There have been cases in which a token rate grew hundreds and even thousands of times after an ICO.
How Much Is a Token Worth: Where to Buy Tokens?
How was mentioned before, tokens can be purchased during an ICO. These are companies that raise funds for an IT startup through an issue of digital shares in the form of tokens. It’s also possible to buy them right after initial placement on crypto-exchanges. In this case, the ratio of supply and demand determines how much is a token worth.
When buying tokens during an ICO, it’s important to carefully study the idea of a project as well as the reliability of an IT company itself. Thus, you should assess the attractiveness of a project as well as check its white paper.
Otherwise, the selected project may turn out to be unprofitable or even a scam. Developers of such projects aim at raising funds for their personal use.
As for the purchase of tokens on cryptocurrency exchanges, popular tokens can be bought on almost all exchanges presented in the network. Before buying a token, make sure you study how much is a token worth as well as the dynamics of its rate. Thus, you shouldn’t buy an asset at the peak of the price.
And of course, the most important step is to check whether the selected exchange is reliable. The most popular exchanges with a huge selection of tokens for purchase are Poloniex and Bittrex exchanges. How much is a token worth? What other interesting facts do you know? Feel free to share your thoughts in the comments!