Blockchain technology has many uses and advantages, and is set to disrupt nearly all industries, including the automotive industry. One of the big reasons why the technology is rising in popularity is the potential rewards that tokens can offer to members and users of blockchains. Let’s take a look at tokens and why they can be used as incentives.
What is a token?
Not to be confused with coins, blockchain tokens essentially allow holders to buy certain products or services offered on the blockchain — in the case of VINchain’s VIN token, it can be used to buy things like car services, detailed vehicle history reports and the like from vendors that belong to their specific blockchain. Tokens have value, but only within the chain. Coins, on the other hand, are simply means to transfer value, and can’t be used for specific goods or services within the chain.
Types of tokens
There are two main types of tokens; security tokens and utility tokens, each with its own particular use. In short, security tokens are essentially the same as stock or shares, whereas utility tokens allow owners to access certain products and services, similar to gift cards or a credit at a store. Security tokens can be traded, while utility tokens can be spent and earned as incentives, but can’t be traded without the exchange of certain goods or services.
Again, VINchain’s VIN token is a great example of a utility token, as it can be earned by members of the chain providing information, and traded for goods and services such as vehicle history reports.
The token incentive
Tokens are great incentives for members, those with access to the particular blockchain, to engage with the blockchain by continually adding and sharing information with other members. This is a new concept and is one of the reasons why blockchain technology is quickly gaining ground.
Blockchain is inherently decentralized, which means it doesn’t have a particular management hierarchy, and ownership is distributed to everyone that participates and/or contributes to the chain. The major advantage of this is that everyone gets rewarded equally and fairly for their contributions.
VINchain rewards drivers
Every time you drive your car, a lot of data is generated — from fuel economy to oil levels, brake wear and cooling system efficiency, among many, many others. This type of data can provide valuable insight into the running of your car, however, in the past this data went largely unused. Sometimes dealerships would collect limited data when servicing a vehicle, which also meant that the owner gave away the data for free. Drivers had no ownership of data and had no say in how, who, and where it could be used. At the same time, there was no incentive to share the data in the first place?
For VINchain, it is important that drivers own this information and have the ability to share it as they see fit. After all, it’s their vehicle which they have invested a lot of money into. However, for the company’s blockchain to perform at its peak, it’s essential that as much information is shared by as many of the blockchain members as possible. This is why they introduced the VIN token, a utility token that serves as an incentive for drivers to share their vehicles’ valuable data to other partners on the chain.
Earning tokens is really simple — every time a driver shares information with the blockchain, they get rewarded with VIN tokens, and every time a vendor uses the information, they get rewarded again. The more information drivers share, the more tokens they earn. These tokens can then be used on partner offerings such as vehicle services, vehicle history reports, and even lower insurance premiums.
The potential application of tokens is virtually endless, making them a very alluring incentive for everyone involved in the blockchain. As blockchain technology becomes ever more popular, we are bound to see token incentives go from strength to strength.