July 28, 2020, 6:25PM EDT
• 8 min read
Tokens are equity in Internet-native businesses
- Crypto protocols are similar to traditional companies in that they provide a service — e.g. file storage, lending, or exchange — in exchange for a fee.
- A major difference between a traditional company and a crypto protocol is the lack of legal recourse — services have to be reliable only using economic incentives.
- Token holders are the owners of crypto protocols. They both govern how the protocol develops and can capture a portion of the profits generated by services provided.