Taxonomy is a system of organizing and classifying things based on their similarities and differences. This process of categorization can be organized into a hierarchy, with the broadest categories at the top and more specific categories at the bottom.
An example of Taxonomy is the Linnaean system. This system involves grouping and categorizing species based on their biological characteristics, such as anatomy, physiology, genetics, and evolutionary history.
A token is a digital asset that can be created to give another asset a value. That means a token can be used to represent almost anything. For instance, a token called SCEUR could represent a token used to pay with a fixed known value.
Alternatively, a token called MACHINE could be a token used to represent the ownership of the machine. The machine has properties like production date and weight. These properties can be added to the ownership token through a schema when created on the blockchain. A schema is a specific taxonomy for a class of tokens.
A standardized taxonomy provides a token on a blockchain with more meaning than just a code and allows a token’s properties to be added to a token at the creation stage. Since the token properties cannot be changed once issued on the blockchain, the attached taxonomy provides proof the token’s specifications have not changed since creation.