How Programmable Tokens Work
(Photo : Citrus)

While a wide range of use cases for blockchain have been forecasted, the most valuable use cases for cryptocurrencies are in the form of Programmable Tokens, providing additional utility and value worth in the trillions of dollars to currencies, institutions, and other financial instruments.

These tokens are a novel approach to open network architecture that developed from the cryptocurrency movement, which began with the introduction of Bitcoin in 2008 and intensified with the launch of Ethereum in 2014.

It might be the next step in the evolution of money while having the potential to be as disruptive as any financial technology now under development. They are gradually gaining traction as governments, social media companies, and even central banks investigate methods to digitally replicate physical money in an increasingly tokenized market. 

Understanding Programmable Tokens

Programmable tokens are crypto tokens that have a lot in common with cryptocurrencies. For example, Ethereum is a blockchain, and Ether (ETH) is its native token. However, there are also additional tokens that rely on the Ethereum network, such as DAI, LINK, and COMP that are considered as cryptocurrencies. 

Even bitcoin is a token that has monetary worth and can be exchanged. Similarly, they can also be represented as tangible assets, as well as a utility or service. Some crypto tokens, for example, represent assets such as real estate and art. 

A token may be described as a smart contract (self-executing codes) in its most basic form. These contracts, which are essentially rights management tools, may represent any existing digital or physical asset. They essentially reflect a set of rules, and each of them is associated with a blockchain address. 

For instance, Citrus (CTS) is a programmable token that utilizes the smart contract mechanism to provide solutions to the blockchain world through its DeFi ecosystem, valuable NFTs, user-friendly DApps, and more.

Working of Programmable Tokens

First things first, programmable tokens are denominated in cryptocurrencies (Bitcoin, Ethereum, or Cardano) and they exist on their blockchains. Blockchains are specialized databases that hold data in blocks that are connected. These tokens, also known as cryptocurrencies, represent a specific unit of value and work on a smart contract mechanism.

Crypto refers to the numerous encryption methods and cryptographic approaches used to protect blockchain entries whereas cryptocurrencies are payments systems that enable safe online transactions through their denominated in virtual tokens. These tokens are represented by internal system ledger entries (the blockchain).

These virtual tokens are frequently used as transaction units on blockchains that are built on networks like Ethereum or Solana, which allows users to generate more tokens. Ethereum and Solana operate on the principle of smart contracts or dApps, in which programmable, self-executing code is used to execute and manage the different transactions that take place on the blockchain.

A brief example of this would be a blockchain that is used to maintain information of a retail chain store, you might have a crypto token that represents a particular number of client loyalty points. Another crypto token may exist that entitles the token holder to see 10 hours of streaming material on a video-sharing blockchain. Similarly, a third token may even represent additional cryptocurrencies, such as a virtual token worth 15 bitcoins on a certain blockchain where all these tokens could be tradable and transferable across blockchain networks and their members.

The Future of Money

Programmable tokens are now a niche and contentious topic. If the current trend continues to stay, it would be regarded as a watershed moment in the design and development of open networks. Further, with platforms like Citrus coming into the space, the industry could see a significant boom in the adoption of these asset classes.

Moreover, by combining the social benefits of open protocols with the financial and architectural advantages of private networks along with good people who would want to maintain the internet open, all businesses, developers, and other independent innovators would be able to take advantage of this crypto revolution.

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