What is a token?

Written By NT00

Last updated 2 months ago

Tokens are digital assets created and managed on a blockchain. They’re the lifeblood of decentralized networks, representing everything from network currency to ownership of unique items. Tokens come in two main types:

Native Tokens:

These are born with the blockchain itself and are essential to its operation. They’re used for transactions, rewards, and other fundamental tasks. Examples include Bitcoin (BTC), Ether (ETH), and Binance Coin (BNB).

Non-Native Tokens:

Created through smart contracts, these tokens can represent specific assets or utilities. They generally fall into three categories:

  • Fungible Tokens: Interchangeable and identical, like stablecoins (e.g., USDT, DAI).

  • Non-Fungible Tokens (NFTs): One-of-a-kind tokens representing unique items (e.g., digital art, collectibles).

  • Multitokens: Bundles that contain multiple tokens (both fungible and non-fungible), making it easier to manage diverse assets together.

Real-World Uses:

Tokens drive decentralized applications and economies. They can represent real-world assets (like real estate or precious metals), provide utility within a dApp (such as paying for services), enable community governance through voting, or even serve as regulated, asset-backed securities.

By leveraging tokens, blockchain projects create thriving, incentive-driven ecosystems that can translate into tangible growth opportunities. For investors, tokens represent more than just digital assets—they’re a gateway to cutting-edge innovation, diversified exposure, and a direct stake in shaping the future of decentralized finance and economies.