A crypto token is a tradable digital asset that resides on its own blockchain and allows the holder to use it for investment or economic purposes. Tokens can be used for trading, to hold as a store of value, and of course, to use as a form of currency.
Introduction
Tokens can be used for trade or can represent ownership of an asset. They can also be programmable, self-enforced contractual agreements between two or more parties – known as smart contracts. For example, an artist can have NFTs associated with their works that can be programmed such that the artist will be paid a royalty whenever a work is sold or traded. In this case, the NFT is both a contractual agreement and a title to the artwork. Tokens can also be fractualized to allow entities to share in the ownership of an asset.
Accounts & Contracts
On the Ethereal blockchain, tokens are also smart contracts and accounts. As a smart contract, each token can be programmed to run transactions. As an account, tokens can also receive, store, and transfer tokens.
Examples of Uses
Theater tickets are a good example of how we use tokens in the real world. We purchase a ticket for some future event — such as a music concert — and, later, redeem the ticket for the right to enter the event. In the crypto world, the theater ticket is an NFT. The currency used to purchase the ticket is a fungible token — one designed to be traded for tangible and intangible items.
An airline ticket is also a great example of a real-world token; in which a ticket represents a specific seat on a specific flight for a specific day. In these examples, tokens can be programmed to be transferable or non-transferrable.