What are tokens & how do they work?

Tokens operate within a pre-existing blockchain to allow for the creation and execution of unique smart contracts that often deliver ownership of assets outside of the blockchain network. Tokens can represent units of value—including real-world items like electricity, money, points, coins, digital assets, and more—and can be sent and received.

What is the difference between a coin and a token?

Both are a type of cryptocurrency. Both rise and fall in price. And both use blockchains to validate transactions. The primary difference between a coin and a token is found at the blockchain level. A coin is the default cryptocurrency of a blockchain. For instance, Ether (ETH) is the default currency on the Ethereum blockchain.

What is a crypto token?

Crypto tokens are a digital representation of an asset or interest in something and are built on a blockchain. Crypto tokens can also be used as investments, to store value, or to make purchases. Cryptocurrencies are digital representations of value designed to facilitate transactions (making and receiving payments) using blockchain technology.

What is tokenization & how does it work?

Tokenization can create several types of tokens. Stablecoins, a type of cryptocurrency pegged to real-world money designed to be fungible, or replicable, are one example. Another type of token is an NFT —a nonfungible token, or a token that can’t be replicated—which is a digital proof of ownership people can buy and sell.