The latest update on Cardano blockchain — which occurred on March 1, 2021 — brought support for the long-awaited

native custom tokens

HOW ARE NATIVE TOKENS REPRESENTED ON THE BLOCKCHAIN?  

WHAT DO ALL THESE TERMS MEAN?

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Shortly after the release, we saw hundreds of tokens being launched quickly by the community

The term token is a short form for

An object that represents value on the blockchain

"asset token"

asset id

policy ID

asset name

ASSET ID

composed of two pieces of information

POLICY ID

ASSET NAME

In the digital context, minting policy is a set of rules

that defines who and under what circumstances can create new tokens or destroy existing tokens

Minting is a term that refers to the process used to stamp physical coins with a mark on one or both sides

For example, the monetary policy of ada is that new ada will never be minted or burned

The minting policy ID is used to permanently associate the asset with the set of rules governing its creation or destruction,

For example, the monetary policy of ada is that new ada will never be minted or burned

which prevents token issuers from either changing the policy after it is created or associating the token with a new policy

The asset name, on the other hand, is an immutable property to identify different assets within the same minting policy

X

Y

which prevents token issuers from either changing the policy after it is created or associating the token with a new policy

EBScoin

The name is not associated with some rule or code and can be composed of common words, such as EBScoin that EveryBlock Studio recently created.

EBScoin

The asset name, on the other hand, is an immutable property to identify different assets within the same minting policy

X

Y

EBScoin

EBS

governance

The name is not associated with some rule or code and can be composed of common words, such as EBScoin that EveryBlock Studio recently created.

EBScoin

EBScoin

However, if we create another token under the same minting policy and name it EBSgovernance, they will be different assets and cannot be exchanged directly.

EBS

governance

EBScoin

Only tokens with identical policy IDs and asset names are fungible with each other

For example, if another group creates another EBScoin, they will have a different minting policy and therefore be distinct assets

EBScoin

EBScoin

Mas qual a vantagem de ter os tokens definidos dessa forma?

On Cardano, custom tokens are native

which means that there is no need to use smart contracts to create all the transaction logic, as it is done on the Ethereum network

BUT WHAT IS THE ADVANTAGE OF HAVING TOKENS DEFINED THIS WAY?

On Cardano, custom tokens are native

which means that there is no need to use smart contracts to create all the transaction logic, as it is done on the Ethereum network

Native token transactions are controlled by the same rules embedded in ada transactions

the primary token of the Cardano ecosystem, ensuring the same level of security for transactions while removing the complexity of token creation

So there is no need to create standards like ERC-20 to define how an asset should be transacted, and any native token created by a third party is automatically supported by the official wallets and can be sent and received more easily

This greatly decreases the potential for error by token issuers and, importantly, reduces the transaction costs, as there is no need to execute a smart contract just to send an asset from one wallet to another

Native token transactions are controlled by the same rules embedded in ada transactions

the primary token of the Cardano ecosystem, ensuring the same level of security for transactions while removing the complexity of token creation

This decreases the potential for mistakes by token issuers and reduces the transaction costs, as there is no need to execute a smart contract just to send an asset from one wallet to another