$BNB 💥. A token is a digital representation of a specific asset or utility that operates on a blockchain network, using smart contracts to ensure its security and execution.

*Types of Tokens*

- *Utility Tokens*: Grant access to products or services within a specific platform. For example, Ethereum tokens are used to pay transaction fees and execute smart contracts.

- *Payment Tokens*: Function as mediums of exchange and are used to conduct transactions within a specific ecosystem. Bitcoin is a classic example of a payment token.

- *Security Tokens*: Represent ownership of an underlying asset, such as shares in a company or bonds.

- *Non-fungible Tokens (NFTs)*: Are unique and not interchangeable, ideal for representing digital artworks or collectible items.

*Functioning of Tokens*

Tokens are created on a blockchain network by issuing a smart contract that establishes their rules and properties. They can then be transferred from one address to another within the same blockchain network, recorded in a block, and validated by the network nodes.