initial coin offerings (ICOs)

Question 1

what four types of tokens circulate?

Answer 1

Payment tokens = cryptocurrencies = coins
Utility tokens
Security tokens for underlying assets
non- fungible tokens (NFT)

Question 2

what do most tokens reside on

Answer 2

Etheureum blockchain

Question 3

what is ERC-20?

Answer 3

• ERC-20 = universal language (protocol) all tokens on ethereum use => ethereum token standardisation
  
  • allows one token to be traded with another
  • easter to integrate into wallets and exchanges

Question 4

how are ERC-20 tokens created

Answer 4

by smart contracts

Question 5

what is the process of participating in ICOs

Answer 5

• Purchaser places order by sending ether (or sometimes bitcoin ) to a digital wallet established by the issuer
• If order is accepted, the tokens are sent to the wallet of the purchaser. otherwise , the bid is returned
• If oversubscribed, acceptance hinges on including a large enough fee to miner to include order immediately in a new block on the ethereum blockchain
  • some token distributions pro rata among all bidders; others by auction to the highest bidder
  • ethereum block cycle time is c. 12 seconds, meaning that some token sales re concluded very quickly

Question 6

what are some precursors of tokens: (5)

Answer 6

• “Gold farming” has become a lucrative business (online gaming)
  
  • QQ coins became accepted by other retailers (social media)
  • US sport teams sell PSL to season ticket holders (personal seat licence)
  • Wimbledon debentures are sold every 5 years (wimbledon debentures)
  • Royal albert hall partly financed by members (royal albert hall)