Tokens meaning is non-mineable digital units of value that exist as registry entries in blockchains. They come in many different forms – they can be used as currencies for specific ecosystems or encode unique data. Furthermore, some serve purposes as stores of values redeemable for other off-chain assets.
Tokens are generally issued by companies using existing third-party blockchains such as the ETHereum blockchain, as exemplified by the many ERC-20 tokens that were issued and sold through ICOs in 2017. Strictly speaking, tokens are not cryptocurrency coins like Bitcoin or ether, but transferable units of value issued on top of a blockchain.
Tokens can be divided into utility tokens and security tokens. Utility tokens generally represent access to a service or can function as a medium of exchange within an ecosystem. For example, a utility token is BNB, which acts primarily as a discount token to pay for trading fees on the Binance exchange. NonETHeless, it can also be used to pay for goods and services.
Conversely, security tokens represent financial assets. For instance, a company could issue tokenized shares during an ICO, granting the holder ownership rights and dividends. From a legal standpoint, these would be identical to traditionally-distributed shares.
Another classification assesses features to distinguish between fungible and non-fungible tokens. Fungible tokens are interchangeable, like 1 BNB equals another BNB. It doesn’t make any difference what unit you hold, as they serve the same purpose. On the flip side, NFTs are never of the same value as you cannot take a unique piece of art and replace it with a different piece of art.
In conclusion, tokens meaning is non-mineable digital units of value that exist as registry entries in blockchains. They come in many forms and serve as building blocks to build up the blockchain.
