Token

A term used to describe cryptocurrencies with specific use on their native blockchain networks.

A token is a digital unit used to represent value. It is a type of cryptocurrency that is designed to have a specific value other than just trading and exchange. Nevertheless, it can be used to substitute investment rights, as a digital receptacle for value storage, or to make transactions. Essentially, every cryptocurrency (referring to crypto coins) is a crypto token, but not all tokens are coins.

There are generally only four major serious types of tokens, corresponding to purposes for tokens. These are utility, payment, security, and stablecoin. A fifth, the meme token has its greatest examples in Dogecoin and Shiba Inu. The vast majority of tokens are created merely as speculative instruments and most become obsolete in a few weeks or months.

Every token on a blockchain uses the same creation protocol to ensure compatibility. For example, tokens on the Ethereum network use the ERC-20 protocol. Tokens on one network cannot generally be exchanged for tokens on another network without a bridge or using a centralized exchange.