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glossary

Definitions and terminology related to cryptoeconomics, blockchain and distributed ledger technology.
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Payment Tokens

Payment tokens are tokens that enables holders to pay for goods and services on a platform. Transacting on the platform is like transacting in a country: native currency is generally required, even for transactions occurring via a digital payment network. Tokens with such a function are generally the exclusive or highly privileged accepted platform currency.

A payment token design is the origin of the term “Appcoin” and “Utility token.” The payment token has been a predominant token design, and most conversations about utility token value proposition and valuation methodologies concern token payment functions, in which the token operates like a currency.

There are variations on this design that involve the token only being needed for fees (even though the host platform accepts other means of value transfer for other activities), the token being the only means of paying for certain features, or the token providing a discount on services. Nonetheless, the logic is the same: aspiring users will acquire the tokens because they want to use the platform.