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What is a token?

Definition of a token

Alex avatar
Written by Alex
Updated over a week ago

A token refers to a digital asset or representation of something in a particular ecosystem or platform. In the context of blockchain and cryptocurrencies, tokens can represent various things:

  1. Cryptocurrencies: Tokens can act as cryptocurrencies like Bitcoin, Ethereum, etc., operating on their own blockchain networks.

  2. Utility Tokens: These tokens are used to access or pay for services within a specific ecosystem or platform. For instance, in a decentralized application (DApp), utility tokens might be required to access features or execute functions.

  3. Security Tokens: These represent ownership of a tradable asset, similar to traditional securities like stocks or bonds. They are regulated and often subject to securities laws.

  4. Non-Fungible Tokens (NFTs): Unique digital tokens that represent ownership or proof of authenticity of a specific item or asset, such as digital art, collectibles, or even real-world assets like real estate.

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