Digital cash or payment tokens are at the forefront of cryptocurrency, and likely the easiest to understand and use. A payment token is the purest form of digital currency, with only two necessary credentials:
They must be a medium of payment.
Payment tokens have their own blockchain.
These tokens will have no ties with a project they’re developing, as the singular focus is a worldwide viable payment solution.
What they’re used for
Payment tokens exist to fulfil a similar purpose to that of cash or gold. They enable trading and selling among other types of transactions for other goods and services, or can simply be used as a payment as the name suggests. In doing so, payment tokens should offer minimal fees and optimal uses for everyday life. However, the argument that these payment tokens serve no use is often mentioned, since fiat money already allows payments for just about everything, and systems are already in place for them. So why the need for payment tokens?
Qualities that differentiate payment tokens from regular fiat
Fiat is already in place. However, it’s set up to collect high fees which is How banks and additional services (mostly government related) make their money. Among other things, fiat payments must be authorized, fiat is subject to inflation controlled by the government which decreases the value you own, and it can take days for large transactions to process. In contrast, token payments offer a variety of benefits:
Instant transactions through the blockchain.
Unlike centralized finance, decentralized finance is only hacked in extremely rare cases, thus it is far safer and a more reliable way to spend.
Fees are cut to practically zero.
Most payment tokens are deflationary, meaning their supply has a limit, and once it is reached, the amount of tokens goes down when they are lost or burned, pushing the token value up (assuming there is a healthy balance of supply and demand).
Payments are confirmed by the algorithm, be it Proof-of-Stake, Proof-of-Work, or something else. Transactions will only fail to deliver on a fault in the process. This is indifferent to fiat where banks, governments and officials can freeze, seize, and reject transactions in unfortunate circumstances.
Leading payment tokens
By volume, and peer-to-peer efficiency, Tether, Bitcoin Cash, Dogecoin, Decentraland’s MANA token, and Tron rank as the top payment tokens. Between the Lightning network integration across the US that allows Bitcoin Cash to move instantly, and Elon Musk’s endorsements of Dogecoin as a viable payment option for Tesla – which trickled down to other large businesses across the country accepting Doge as payment – payment tokens are beginning to seamlessly build their way into mainstream adoption. As more users are given the option to pay with crypto through services such as PayPal, or Apple pay, their viable stance as a better option over fiat becomes crystal clear.