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Learn what are social tokens in this demystified guide for individuals and communities
Social Tokens are a type of cryptocurrency that is issued and managed by individuals or communities created using Blockchain technology providing a decentralized and secure way to create, manage and exchange digital assets. It is one way for individuals or communities or organizations to monetize their social capital.
Social Tokens are one of the many innovations emerging from the crypto industry which is adopted across several industries like arts, entertainment, gaming, sports, culture, content creation, etc. Typically built on the Ethereum blockchain following the same model as Cryptocurrencies, they stand at the intersection of DeFi and Non-fungible Tokens(NFTs). Social Tokens represent a community or individual ownership, whereas NFTs represent ownership of a unique and non-fungible digital asset. However, there are three types of social Tokens, namely, Personal Tokens, Community Tokens, and Social Platform Tokens.
Social Tokens are exchangeable assets tied to a community affiliated with a content creator or brand. The different types of these tokens have unique characteristics and use cases too. The first is issued by individual influencers or creators while the other by communities or organizations. These token poses many benefits as they allow communities to create and manage their economies. By this method, communities can encourage members to contribute by creating content, giving feedback, etc. Another benefit of social Tokens is that they provide new ways for creators and influencers to monetize their work. Creators can build a direct relationship with fans by creating their digital assets and rewarding them for their support. As they are built over blockchain, there are fewer chances of fraud. One potential issue is that they can be documents. Another challenge is managing the distribution and supply of social Tokens. Thus, Social tokens have the potential to transform the way creators and communities monetize their content. As the crypto industry continues to evolve, these social Tokens become mainstream.