Tokens and Accounts in the Context of Digital Currencies

Alexander Lee, Brendan Malone and Paul Wong

No 2020-12-23, FEDS Notes from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This report provides an overview of two concepts that come up frequently in discussions of digital currencies: tokens and accounts. The meaning of each concept differs depending on context. For cryptocurrencies, the term "token" has a relatively straightforward, technology-specific definition. For central bank digital currencies (CBDC), the term "token" takes on more of a conceptual or analytical meaning. To further complicate matters, "tokens" and "accounts" are not always mutually exclusive ideas. This paper identifies areas where this terminology has caused confusion and explains why the terminology is problematic in an effort to improve the technical and conceptual discourse on digital currencies and the "tokenization" of financial assets.

Date: 2020-12-23
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfn:2020-12-23

DOI: 10.17016/2380-7172.2822

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