Token

Tokens (not to be confused with coins) are digital units issued on a blockchain. Crypto token can be used as a currency for certain ecosystems or they can be used to encode unique data. Furthermore, some tokens may be redeemed for off-chain assets, such as gold, property, and stock.

Companies typically issue tokens on existing third-party blockchains like the Ethereum blockchain, as evidenced by the numerous ERC-20 tokens created on top of Ethereum. Tokens are transferrable units of value released on top of a blockchain, rather than cryptocurrencies like Bitcoin or ether.

Tokens are classified in a variety of ways based on their varied properties. To separate tokens into utility and security tokens, the main classification uses functionality. Utility tokens are used to get access to a service or to act as a means of exchange inside a network. Meanwhile, security tokens represent financial assets.