Definition
A token is a blockchain-recorded unit that can represent value, access, governance rights or another defined entitlement. In common usage, tokens are issued on an existing network, whereas a coin is native to its blockchain. Usage is not universal, so the asset’s actual design matters more than the label.
How It Works
A token contract or network-level asset program records ownership and applies transfer or issuance rules. Standards define interfaces that wallets and applications can recognize. For example, a fungible token may track balances and allow holders to approve another address to spend a specified amount. The network’s native coin may still be needed to pay transaction fees.
Uses and Limitations
Tokens can support payments, application access, governance or representations of external assets. Possession does not automatically grant company ownership, copyright or a legal claim to reserves. Those rights depend on the token’s terms and structure. Contract permissions, minting powers, transfer restrictions and custody arrangements can materially affect holders. Identical names or symbols do not prove that two tokens are the same asset; network and contract address also matter.