What are tokens (are tokens legal)

What is a token? The value of blockchain lies in providing a decentralized way to make transactions more convenient, efficient, and cost-effective. A token is the act of buying and selling a digital currency or securities issued by one or more entities online. These assets can represent certain types of services or be used as payment methods for other services or products. And these applications and products are usually sold at specific prices and become increasingly attractive over time

Therefore, it is easy to call this Cryptocurrency a “virtual gold”. If we look at the price trend chart of Bitcoin, we can see that its price is highly correlated with its market value: from January 2013 to the end of 2019, Bitcoin has increased by over 200%; But by the beginning of 2020, it began to decline. This has led to a significant adjustment in the market, but investors have not been affected. Because currently most people believe that the price of Bitcoin will continue to decline, and there have been some changes. 1. The problem of Scarcity of Bitcoin has existed in the market since 2008, when many people regarded it as a tool to hedge against inflation. However, Bitcoin is currently experiencing significant fluctuations. This situation occurs when governments around the world decide to take various measures to control the economy. The United States has also been considering whether to launch the Central Bank Digital Dollar (CBDC). Since no central bank can fully manage the project, the Federal Reserve may take a long time to achieve this goal, and may even delay this plan. 2. What is a token? In many cases, tokens are described as programmable assets (NFTs) used to record and exchange content. For example, Bitcoin holders can purchase more tokens by sending a small amount of ETH to the community. Then, token holders can also trade bitcoin and other Cryptocurrency in the Secondary market and earn profits. In addition, there are many encryption projects, such as RippleLabs, DCG, etc. The total supply of these tokens includes 10 billion pieces. 3. What is the purpose of tokens? The main purpose is to help promote the development of ecosystems, increase user stickiness and engagement. For example, tokens serve as stable units for reward mechanisms. 4. Tokens can be used to motivate community members to contribute, rather than paying them fees as before. (Bitcoinist)

Is tokens legal

According to CCN, Article 15 of the US Securities Act clearly states that tokens are securities. According to current laws, digital currency belongs to an “investment contract”, which refers to the ability of a company to purchase the fund or stock with its issued equity (including but not limited to the company’s shares) Therefore, creating a project on the blockchain requires ICO or using tokens as an investment contract to raise funds; If investors believe they hold a certain token, it should be considered as an investment contract; If investors feel that they own some assets and wish to sell them to others, they should be regulated in accordance with securities regulations, protect their interests to a certain extent, and comply with relevant tax and financial rules.