sorry in advance if this is the wrong forum for such a question. I just want to understand something at a high level.
When projects, for example new video games are launching on a Blockchain (e.g. on Ethereum), they will typically create their own token, and people will buy it, it will have a market cap, etc.
What is the purpose of this?
If the game/web application has interactable and purchasable items or features, then they could just make a smart contract to accept ETH as payment. Why does $NEW_DAPP need its own $NEW_COIN ?
Some ideas I had, but I'm not sure if they're right:
- The $NEW_COIN will be specific to the application and provide a discount to its utility somehow (how?)
- The $NEW_COIN being bought will represent shares being invested in the project, to incentivize the creators to finish it fully, add features, add support, etc.
Again though, the main concept I'm not understanding is why making your own coin, say an ERC-20 token, is more useful than just transacting in ETH.
Thank you for any explanations, use cases, specific examples, etc. Really trying to wrap my head around this.