⚡ TL;DR – What Does “Token” Mean in Crypto?
In crypto, a token is a digital asset built on top of a blockchain. Unlike coins (like BTC or ETH), tokens don’t have their own blockchain — they run on existing ones like Ethereum or Solana. Tokens can represent value, utility, governance rights, or even real-world assets.
❓ What Is a Token in Crypto?
A token is a type of cryptocurrency that is issued and managed using smart contracts on an existing blockchain platform.
Think of it as a digital asset created on a blockchain like Ethereum, Solana, or BNB Chain that can be used for various purposes — from payments and staking to accessing dApps and voting in DAOs.
Tokens are versatile and essential in Web3 ecosystems.
Token vs Coin: What’s the Difference?
| Feature | Coin (e.g., BTC, ETH) | Token (e.g., UNI, USDC) |
|---|---|---|
| Blockchain | Has its own blockchain | Runs on another blockchain |
| Use case | Currency, payment, store of value | Utility, governance, access, representation |
| Examples | BTC, ETH, SOL | USDT, AAVE, LINK, MATIC (on Ethereum) |
So, Bitcoin is a coin because it runs on its own chain. Uniswap (UNI) is a token because it runs on Ethereum.
Types of Crypto Tokens
There are several categories of tokens in the crypto world:
- Utility Tokens – Give access to features or services within a dApp (e.g., LINK, GRT)
- Governance Tokens – Let users vote on protocol changes (e.g., UNI, COMP)
- Stablecoins – Pegged to fiat currencies (e.g., USDT, USDC, DAI)
- Security Tokens – Represent ownership in real-world assets (like stocks or real estate)
- NFTs – Non-fungible tokens representing unique digital items (e.g., art, collectibles)
Each type serves a unique function in its ecosystem.
How Are Tokens Created?
Tokens are typically created via smart contracts using token standards:
- Ethereum: ERC-20 (fungible), ERC-721 (NFTs), ERC-1155 (multi-token)
- Solana: SPL Token Standard
- BNB Chain: BEP-20
Projects use these standards to launch their own tokens without building a new blockchain from scratch.
What Can You Do With Tokens?
- Trade them on DEXs or CEXs
- Vote in DAOs and governance proposals
- Pay for platform services or gas fees
- Earn yield by staking or liquidity mining
- Represent ownership or value (security tokens)
- Own and trade NFTs
Tokens power almost every aspect of Web3 — from DeFi and NFTs to gaming and identity.
🔑 Key Takeaways
- A token is a crypto asset built on an existing blockchain via smart contracts.
- Tokens serve multiple purposes: payments, governance, access, identity, and more.
- Unlike coins, tokens don’t have their own blockchain — they ride on other chains.
- Standards like ERC-20 (Ethereum) or SPL (Solana) govern how tokens behave.
- Tokens are essential to the functionality of DeFi, NFTs, DAOs, and the wider Web3 ecosystem.
❓ Frequently Asked Questions About Tokens
A token is a digital asset created on an existing blockchain (like Ethereum or Solana) that can be used for various purposes like payments, governance, or access to services.
A coin has its own blockchain (like BTC or ETH), while a token runs on another chain (like UNI on Ethereum).
Yes. NFTs are a type of non-fungible token that represents unique digital items or assets.
Yes! With basic coding skills and a blockchain like Ethereum, you can launch your own ERC-20 or SPL token using smart contracts.
It depends on demand, utility, tokenomics, and market sentiment. Some tokens have strong fundamentals; others are speculative or meme-based.
