There are various crypto tokens, here are some you may have heard of: reward tokens, utility tokens, non-fungible tokens (NFTs), security tokens, asset-backed tokens, governance tokens, and stablecoins. In this article, we will be explaining these types and their features.

Rewards tokens pay you while you wait, as opposed to investing in a cryptocurrency token and waiting for its price to increase. Thus, they provide passive income.

The majority of tokens fall under the utility token category. There are many different utility tokens, and they all serve different functions.

They are also among the most widely used utility tokens (NFTs). They use smart contracts to demonstrate ownership. Most of them utilises Ethereum, while others like Tezos (XTZ) and Solana (SOL) have also expanded their NFT networks.

They are similar to stocks except they are based on a blockchain.  Ownership of a resource is represented by security tokens. This asset can be a business, a piece of real estate, or even a vehicle. Security tokens eliminate the delays and fees that are typical of brokerages.

Tokens that are backed by physical assets are digital claims on those assets. Any physical asset can be tokenised and turned into an asset-backed token, including gold, crude oil, real estate, stock, soybeans, and a wide range of other commodities.

Various decentralised finance applications allow governance token owners to cast votes. The more tokens one owns, the more power their vote holds. Voting topics can include fee prices, upgrades to the network, and reward quantities.

Despite their name, they are a type of token called commodity tokens. Commodity tokens are backed by assets that have an independent value. They can be tied to the price of the US dollar, gold, or even oil. The two largest stablecoins, Tether and USD Coin, are built on the Ethereum network.