What is Token?
A token is a representation of an asset or utility within a blockchain. It serves various purposes, including granting access to specific services, representing assets, or enabling transactions within a particular network. Tokens can be categorized into different types such as utility tokens, security tokens, and governance tokens, depending on their function.
In cryptocurrency ecosystems like Bitcoin and Ethereum, tokens allow users to participate in the network, whether by transferring value or engaging in decentralized applications (dApps). Tokens are typically created through a process called an Initial Coin Offering (ICO) or token generation event, where they are distributed in exchange for cryptocurrency like Bitcoin or Ether.
Unlike traditional currencies, tokens often serve specific purposes within decentralized networks. For example, some tokens provide voting rights in governance protocols, while others may represent ownership of physical or digital assets, such as real estate or art.
Tokens are fundamental to the blockchain ecosystem, enabling various use cases from decentralized finance (DeFi) to non-fungible tokens (NFTs) in gaming and art.
