What Your Tokens Can Do for You and Why You Should Protect Them
Although the most popular blockchain tokens are cryptocurrencies, tokens can take on many different forms that are as equal, if not more, valuable. Using tokens like NFTs to create unique membership and community value has become more and more common; tokens have never offered more benefits and investment value than ever before.
Blockchain technology is changing the world: its tokenization method makes highly secure and valuable digital assets a reality. Tokens can offer you more than just investment value – they can also represent real-world wealth and status. As such, protecting them and ensuring you always have access to your blockchain wallet accounts is critical.
In this article, we will discuss what tokens can do for you, including examples of different projects and organizations making waves in the blockchain industry today. Keep reading to learn about how Webacy’s backup wallet tool can keep your tokens safe.
What is a Token?
A token is a digital asset that exists on the blockchain. Tokens are used to create and enable a variety of additional digital assets, such as cryptocurrencies and NFTs.
In the simplest terms, a token is a representation of a specific set of rules that have been encoded into a smart contract – an automated contract with exact specifications for buying and selling digital assets written into its code.
While the most common use of tokens is for creating and trading cryptocurrencies, tokens can actually have many different uses, including storing data, information, and value. Depending on the digital asset a token represents, the token may even provide exclusive access to forums, rights to vote on projects, and much more. Think of it as a digital membership card that gives you various benefits.
Understanding the Decentralized Autonomous Organization: A Brief Overview of DAO
The Decentralized Autonomous Organization – more commonly referred to as DAO – was created and launched in early 2016. Designed and founded by a group of developers within the cryptocurrency space, DAO embraced the decentralized nature of blockchain tokens and was not associated with any existing nation or governing organization.
For the members of DAO, there are many advantages including gaining real-life benefits as well as accruing value through whatever tokens they may own. While the first DAO originated as one pioneering organization, there are now many different DAOs operating according to their own protocols.
Now that we understand both Tokens and DAOs, we’ll talk about how they interact, and the value that creates.
Benefits of Tokens and DAO Memberships
These days, simply owning an NFT or an ERC-20 token can unlock a whole world of opportunity.
For instance, the Friends With Benefits token ($FWB) offers owners of the token exclusive access to a Discord server comprised solely of other $FWB holders. Additionally, as a member of the FWB DAO, owners of these tokens are granted further exclusive access to major parties and conferences, such as private parties at the NFT NYC event.
Another extremely popular example of the use of tokens to create exclusive and prestigious groups is the Bored Ape Yacht Club (BAYC). BAYC includes a collection of NFTs picturing a cartoon ape with a variety of different backgrounds and outfits. This particular organization has attracted major attention from celebrities and investors alike, with owners of BAYC NFTs gaining access to an exclusive Discord server that includes chances to (digitally) rub elbows with A-list celebs like Justin Bieber and Post Malone.
Of the existing DAOs, many different and prominent examples showcase the advantages of becoming a member of these organizations. Here are 3 key examples of powerful DAOs:
- PleasrDAO: Described as a “collective of Defi leaders,” the PleasrDAO deals primarily with the collection and trading of NFTs, with a distinct emphasis on trading and bidding on unique pieces containing powerful messages. This DAO aims to foster a community of creators, innovators, and investors to provide communal value that increases over time.
- BitDAO: BitDAO is a DAO-directed treasury committed to investing in a wide range of different Defi projects, from cryptocurrencies to NFTs. This particular DAO stands out for its incredible ability to raise capital and wealth for its treasury, which currently includes more than $2.5 billion in investments.
- LinksDAO: LinksDAO offers an excellent example of how to use tokens and NFTs outside of art trading alone. This organization uses NFTs as membership tokens, allowing owners of their NFTs access to a golf club community, governance rights, real-life games, and more. By buying into the project, early members have voting rights into what golf course may potentially be purchased – as well as membership rights when the golf course is eventually purchased. What seems like a light-hearted play at the next level of “crowdfunding” is now a peek into the future of group ownership, and group access, governed by technology powered by blockchain.
Final Thoughts: Protecting Your Tokens Long-Term
Your tokens are protected inherently on the blockchain through two key elements:
- The Secret Key: A blockchain account is protected by a cryptographic key that is more complex and secure than a password. There are both private and public keys – the public key is what you use to authorize transactions, while the private key identifies you as the owner of the account.
- The Wallet: Your blockchain account is called your wallet. Within this account, you can store your digital assets securely.
Once created, a blockchain wallet – and all the tokens inside it – can not be deleted without an authorization by you. This means you have lifetime access, as long as you keep track of your key. When you lose access to your keys, you lose access to not just your assets but also your status and benefits gained through ownership of specific tokens.
As a result, it is crucially important to store your keys in safe locations where you can ensure they are never lost. One of the best ways to do this is by using a third-party provider, such as Webacy, that offers a key-less solution that doesn’t require storing any access information whatsoever. Webacy’s backup wallet feature allows you to recover access to your tokens in the event that you lose access to your primary wallet through its unique technology.
Another popular alternative that has emerged so far is to use a multi-signature wallet. Using a multi-sig wallet, you will need two or more keys to access its tokens, enabling more than one person to have authorization and ownership over the wallet. This method has its pros and cons – it needs to have the X of Y rules set ahead of time, managed carefully, and cannot predict who can sign a transaction and when.
You would need to have an incredibly trustworthy and responsible person to hold these other keys, such as a professional financial advisor, as it will have access to all of your valuable tokens.
Ultimately, your tokens are your assets, and now, more importantly, your access to things in the world. It represents status, permission, and ownership. This is certainly something worth protecting.