The tokens that have a specific “use” on the blockchain or its App are
utility tokens, also known as “app coins” because of their being explicitly
designed for a certain app or blockchain. For this reason, the utility tokens
are intended exclusively for such specific use and are not investment
instruments.
Investments, such as shares, bonds, funds are represented by security tokens
digitally, on the other hand. Security tokens are the securities of companies,
fund houses, or real estate funds issued via the blockchain, representing
profit participation, interest income, or to give voting rights or generate
profits for the holders of those tokens.
Therefore, the security tokens are subj ect to various state regulations and
legal frameworks to which the issuer must adhere to, whereas this does not
apply to utility tokens.
Conclusion
This chapter introduced you to Ethereum, which is a decentralized, self-
contained economy for transactional computation and its related data, an
open blockchain platform that lets anyone build and use dApps that run on
blockchain technology. An introduction to Ethereum and an explanation of
the difference between Ethereum and Bitcoin is provided. Next are
discussed the programming languages for Ethereum, Ethereum Virtual
Machine, and the layers of the Ethereum platform. An explanation of
accounts both externally owned and contract accounts, Wallets, a
comparison between accounts and wallets, Gas—
the cost unit together with
the issue of rising ETH gas fees that has led to the rise of Layer 2 protocols
such as polygon is discussed next. The process of creating a block of
transactions to be added to the Ethereum blockchain is explained in mining
and the steps of mining. Block, its structure, its size, the block creation
difficulty adj ustment methodology, U ncle block, block timing, and ETH are
explained next. Further discussed are smart contracts, their transactional
rules, their advantages together with dApp, the difference between smart
contracts and dApp.
For creating your own cryptocurrency using the solidity programming
language, its environment set up, syntax, reserved words, rules to follow are
discussed. ERC-20, ERC223 , ERC621, ERC7 21, and ERC827 Standard
Tokens, a comparison between a security token and utility token are
.