What are Tokens
Tokens are digital assets that are built and created on top of Layer 1 blockchains. Tokens can represent assets or act as cryptocurrencies in their own right, which can be traded or exchanged on the blockchain.
Tokens can represent anything from traditional currencies, like the US dollar or euro, to unique assets, like real estate or artwork. They can also represent a utility or provide access to specific applications or services, acting as a membership or subscription. The most prominent token type is Ethereum’s ERC-20 standard, which allows for interoperability between different Ethereum-based tokens.
How Tokens Changed the Game
Tokens have had a significant impact on the cryptocurrency landscape, transforming it in various ways. Overall, tokens have played a crucial role in the development and expansion of the crypto ecosystem, driving innovation, enabling new use cases, and attracting a diverse range of participants.
Tokens introduced a wide range of new digital assets beyond traditional cryptocurrencies, such as utility tokens, security tokens, non-fungible tokens (NFTs), and stablecoins. This diversity has helped attract a broader range of investors and users to the crypto space.
Many blockchain projects use tokens to facilitate decentralized governance, allowing token holders to vote on proposals or influence the direction of a project. This model can promote transparency, fairness, and community engagement in the decision-making process.
The Need for Privacy
As the cryptocurrency market continues to grow and mature, the need for privacy in crypto transactions becomes more pronounced. With increasing adoption, cryptocurrencies have drawn the attention of governments and regulatory bodies worldwide, leading to heightened scrutiny and calls for regulation to ‘'protect consumers'’ and further their reach on power.
While regulation can help legitimize the industry and foster wider adoption, it may also threaten the privacy and anonymity that have been core values for many users since the inception of cryptocurrencies. In this context, privacy in crypto becomes essential to strike a balance between regulatory compliance and preserving individual freedom and liberty.
Privacy-focused cryptocurrencies and tools empower users to maintain control over their personal information while navigating an increasingly regulated environment. By providing confidentiality and transactional privacy, these solutions can help protect user data from third parties, including hackers, marketing companies, governments, and other malicious actors.
Moreover, privacy features can play a crucial role in preserving financial autonomy and fostering financial inclusion, particularly for those living in regions where governments may exercise excessive control over financial systems.
Ultimately, striking a balance between the need for privacy and the requirements of incoming regulation is essential for the long-term growth and sustainability of the crypto ecosystem.
Introducing Zano Confidential Assets
Zano Confidential Assets present a unique opportunity for users and businesses to create private tokens tailored to their specific needs. By leveraging Zano’s privacy features, users can issue tokens on the Zano blockchain that ensure secure, anonymous, and discreet transactions —the same privacy Zano itself enjoys. This empowers projects operating in sensitive industries.
By leveraging Zano’s privacy features, users can issue tokens on the Zano Blockchain that ensure secure, anonymous, and discreet transactions, the same privacy Zano itself enjoys, This empowers projects operating in sensitive industries. Private tokens hold significant potential to reshape the crypto landscape by providing users with an unparalleled level of privacy and security. In addition to providing enhanced privacy, private tokens (confidential assets) can enable new use cases and foster innovation within the wider cryptocurrency space.
The difference between Zano and Ethereum Tokens
Ethereum is a public and transparent blockchain, meaning that all transactions and smart contracts deployed on the platform can be openly viewed and verified by anyone with access to the Ethereum blockchain explorer; it does not provide privacy. Here's how Ethereum's transparency works:
- Transaction details: Every transaction on the Ethereum blockchain includes the sender's address, the recipient's address, the amount transferred, and any additional data. These details are recorded on the blockchain and can be accessed by anyone using a blockchain explorer, forever!
- Pseudonymity: Users are identified by their wallet addresses; these addresses are not inherently anonymous. Since Ethereum transactions are public, patterns and relationships between addresses can be analyzed, leading to the identification of users.
- Data analysis and tracking: Advanced data analysis and blockchain forensics techniques can be used to track transactions and identify patterns. By combining transaction data with off-chain information, such as IP addresses or social media profiles, it’s possible to associate wallet addresses with real-world identities.
While transparent, first-generation blockchains such as Ethereum have many wonderful use-cases, we’re reaching the point where, as the industry matures, we need to fix how these technologies embed into our lives while preserving our rights.
Zano is a next-generation, surveillance-proof, scalable, and secure cryptocurrency with support for confidential assets. Here's how Zano’s privacy works:
- Transaction details: The transactions between Zano's blockchain users are made untraceable with ring signatures and stealth addresses. Also, the way transaction data is stored on the blockchain allows access by authorized parties only, and none of the private data is ever publicly published.
- Anonymity: Unlike Ethereum, Zano doesn’t show or store any sender or recipient addresses on its blockchain whatsoever, making it impossible to follow the transaction trail or see the amount of Zano held by any wallet, as it should be, by default!
- Data analysis and tracking: Zano is surveillance-proof. Advanced data analysis and blockchain forensics techniques won't work with Zano.
Tokens inherit the same features as the underlying Layer 1 blockchain upon which they’re created, making Zano by far the superior platform for users, businesses, and projects seeking privacy and anonymity for their users.
While transparent, first generation blockchains such as Ethereum have many wonderful use-cases, they weren’t built with our fundamental human right to privacy in mind, leaving us exposed to tyrannical government overreach and malicious actors.
Private Token Use-cases
Tokens have various use cases, often depending on the underlying blockchain platform. Here is a list of common token use cases:
- Utility Tokens: These tokens provide users with access to a product or service within a particular ecosystem.
- Governance Tokens: These tokens allow holders to participate in the decision-making process of a decentralized platform or organization. Token holders can propose changes, vote on proposals, and influence the development and direction of the project.
- Security Tokens: These tokens represent ownership of an underlying asset, such as shares in a company, real estate, or other investments. Security tokens are subject to regulatory requirements and often provide holders with rights, such as voting or receiving dividends. Examples include tokenized stocks and real estate-backed tokens.
- Stablecoins: These tokens are pegged to a stable asset, such as fiat currency or a commodity, to minimize price volatility. Stablecoins can be used for payments, remittances, or as a stable store of value in the cryptocurrency market.
- Payment Tokens: These tokens are primarily used as a medium of exchange for buying goods and services.
- Asset-backed Tokens: These tokens represent ownership or fractional ownership of an underlying asset, such as precious metals, commodities, or collectibles.
- Reward Tokens: These tokens are earned by users for participating in a platform or ecosystem, such as staking, providing liquidity, or completing specific tasks.
- Cross-chain Tokens: These tokens enable interoperability between different blockchain platforms, facilitating the transfer of value and data across various networks.
These are just a few examples of the diverse use cases for cryptocurrency tokens. Adding Zano’s privacy to these use-cases can help us push the limits of what can be achieved.
Zano's Confidential Assets will go live with the Zarcanum hardfork, expected for July 2023. Want to read more about Zano's confidential assets? Check this article out: https://blog.zano.org/introducing-zano-confidential-assets/
Written by community member @kekzploit.