Tokens, and especially Non-Fungible Tokens (NFTs), have gained significant attention in the digital world. Tokenization has played a key role in the success of blockchain technology

In this article, we will define what a token is, discuss the different types of tokens, and explore their uses and standards. We will also examine how TEO – The Energy Origin is tokenizing energy and sustainability attributes using blockchain technology.

What is a token?

A token is a unit of value issued by an organization that can be bought, traded, resold, or collected without the need for third-party intervention. Tokens are stored on the blockchain as data, making them unique and unable to be duplicated or transferred twice.

There are three main types of tokens:

  • Fungible tokens: These tokens are interchangeable and have the same value as one another. Cryptocurrencies, such as Bitcoin, are examples of fungible tokens.
  • Non-Fungible Tokens (NFTs): NFTs are one-of-a-kind digital assets that represent a real-world item, such as a piece of art or collectible. Because each NFT has distinct characteristics and value based on factors such as its creator or rarity, they cannot be exchanged for another NFT.
  • Semi-Fungible Tokens (SFTs): These tokens are initially interchangeable, but once they are redeemed, they become non-fungible. An example of an SFT is a voucher that has an expiration date. It can be exchanged for another voucher of the same type before the expiration date, but once the date has passed, it cannot be exchanged for a valid voucher.

Usage and standards

Tokenization allows for the digital representation and exchange of real-world assets. By encoding an asset and its rights directly onto a token, tokenization enables secure and instant peer-to-peer management and exchange. Smart contracts and tokens are closely linked, but because smart contracts have many different applications and no standardized framework, standards have been developed to ensure that community members can interoperate when using tokens. The most well-known standard for fungible assets is ERC20, while ERC721 is the standard for NFTs. These standards provide guidelines for token usage and allow for better control and management of tokens of the same type.

TEO’s use of tokens

TEO – The Energy Origin is utilizing tokens to digitize energy and related Environmental, Social, and Governance (ESG) attributes. By materializing real volumes of energy and sustainable impacts, TEO allows final customers to purchase these attributes. The use of blockchain technology ensures that the volumes and ESG attributes cannot be duplicated or transferred twice by the issuer and that only the final customer can claim ownership. This use of tokens promotes energy management by allowing for the secure and efficient exchange of energy and sustainability attributes.