A token is a digital asset issued and accounted for using the infrastructure of an existing blockchain. Unlike a coin, a token is generally not the native unit of its own blockchain.

Tokens can represent different types of rights, utility, or economic value. They can be used for application access, governance, accounting, representation of other assets, and financial operations.

How tokens are created

On programmable blockchains, a token is often implemented through a smart contract. The contract can maintain balances and ownership information and define transfer rules and other operations. The exact architecture depends on the blockchain and token standard.

Common token types

  • utility tokens — provide access to products or functions;
  • governance tokens — provide mechanisms for protocol governance;
  • stablecoins — seek to maintain relatively stable value;
  • wrapped tokens — represent another asset in a compatible blockchain format.

A single token can serve several functions at the same time. Classification therefore depends on both technical implementation and economic purpose.