The word “token” is used frequently in discussions about crypto and blockchain, but it is often left undefined. In practice, a token is a type of digital asset created and managed on an existing blockchain network.
Understanding what a token is—and how it differs from other digital assets—is essential for making sense of crypto markets, regulation, and business adoption.
Tokens Are Built on Blockchains
Unlike Bitcoin, which is native to its own blockchain, tokens are created on top of blockchains that already exist.
Common examples include:
- Tokens issued on Ethereum
- Tokens created on Solana
- Tokens built on other smart-contract networks
These tokens rely on the underlying blockchain for security, transaction processing, and recordkeeping.
What Tokens Are Used For
Tokens can serve different purposes depending on how they are designed.
Some tokens are used to:
- Facilitate payments within an application
- Represent access to a service or platform
- Provide governance rights, such as voting on protocol changes
- Track ownership of digital or real-world assets
Because tokens are programmable, their behavior is defined by software code rather than by a central authority.
Tokens vs. Coins: A Key Distinction
A common source of confusion is the difference between a token and a coin.
- Coins are native to their own blockchains
- Example: Bitcoin on the Bitcoin network
- Tokens are issued on top of existing blockchains
- Example: A stablecoin issued on Ethereum
All tokens are digital assets, but not all digital assets are tokens.
Why Tokens Matter
Tokens are central to much of the innovation—and risk—within crypto markets.
They enable:
- New financial products
- Decentralized applications
- Faster experimentation than traditional finance
At the same time, tokens raise important questions around:
- Regulation
- Consumer protection
- Disclosure and transparency
These questions are now a major focus of regulators and courts.
How The Token Journal Uses the Term “Token”
In its coverage, The Token Journal uses “token” as a general category term for blockchain-based digital assets, while remaining precise in technical explanations.
When accuracy matters, distinctions between coins, tokens, and other digital assets are stated explicitly.