What is a token
A token is a digital asset created on an existing blockchain using smart contracts.
Unlike cryptocurrencies such as Bitcoin, tokens do not have their own blockchain. Instead, they operate on top of an existing blockchain network.
How tokens are used
Tokens can serve different purposes in blockchain ecosystems, including:
- providing access to services
- governance and voting in decentralized protocols
- payments within applications
- investment assets
Types of tokens
There are several types of blockchain tokens, including:
- Utility tokens
- Governance tokens
- Security tokens
- Asset-backed tokens
- Liquidity provider tokens (LP)
- Meme or social tokens
- NFT
Related terms
FAQ
What is the difference between a token and a cryptocurrency?
A cryptocurrency usually has its own blockchain, while a token is built on top of an existing blockchain.
Where can tokens be created?
Tokens can be created on platforms such as Ethereum, Solana, or BNB Chain.
How is a new token created?
A new token is created by deploying a smart contract that defines its supply and behavior.