What is a Token

If you’ve spend any time in cryptospace, you may have heard of term coins and tokens. Some cryptocurrencies are coins and some are tokens.

In cryptocurrency world, coins and tokens are two ways to represent some kind of value. A coin means something that can be transferred from one person to another in exchange for something. For example, Bitcoin and Litecoin.

A token is usually an additional asset that represent some value on top of an existing blockchain. Tokens can also be used as utility. Think of tokens as digital points that can be exchanged for some function. A blockchain based on bitcoin can have a utility token to use the platform.

For example, if there is a blockchain platform that allows you to verify a person’s background check, there can be a payment in terms of tokens for the verification work done by the blockchain. A users of the platform must acquire tokens before they can get verified.

The process of creation and use of tokens is called Tokenization.