what are crypto tokens 
a crypto token is a representation of an asset or interest that has been tokenized on an existing cryptocurrency s blockchain crypto tokens and cryptocurrencies share many similarities but cryptocurrencies are the native asset of a blockchain crypto tokens are often used to raise funds for projects and are usually created distributed sold and circulated through an initial coin offering ico process which involves a crowdfunding round history of crypto tokensalthough there were cryptocurrencies that forked from bitcoin and ethereum previous to the 2017 ico boom the first recognized ico and token was mastercoin mastercoin was created by j r willet and announced on january 2012 via bitcoin forum he titled his whitepaper the second bitcoin whitepaper mastercoin was one of the first projects to describe using layers to enhance a cryptocurrency s functionality the project linked the value of mastercoin to bitcoin s value and explained how the project would use the funds to pay developers to create a way for users to make new coins from their mastercoins 1between 2012 and 2016 crypto token creation and ico increased until 2017 token offerings skyrocketed as investors seemed to become aware of them and the possible increase in value they promised 2 developers businesses and scammers began creating tokens rapidly in attempts to take advantage of the fund raising boom so much so that regulatory agencies began issuing alerts to investors warning them about the risks of icos 34not all crypto tokens and icos are scams many are legitimate efforts to raise funds for projects or startups the ico bubble burst in 2018 shortly after initial exchange offerings ieo emerged where exchanges began facilitating token offerings 5 exchanges claimed to have vetted the token offerings reducing the risks to investors however scammers used the exchanges to promote their scams regulatory agencies issued alerts to investors about the risks involved in participating in an ieo they also alerted exchanges that they were required to register with the authorities if they were facilitating these fund raising efforts the logic was that the exchanges might be acting as alternative trading systems or broker dealers which by law are required to register 6crypto tokens are still being created and used to raise funds for projects through icos whitepapers read like pitchbooks outlining the token s purpose how it will be sold how the funds will be used and how investors will benefit concerns about crypto tokensthe single most important concern about crypto tokens is that because they are used to raise funds they can be and have been used by scammers to steal money from investors however it can be difficult to distinguish between a scam token and one representing an actual business endeavor here are some factors to look for when you re looking at a crypto token 