Understanding Tokens in the World of Crypto
In the world of cryptocurrency, "tokens" are digital units of value built on existing blockchain networks. Unlike coins like Bitcoin or Ethereum, which have their own blockchains, tokens operate on another blockchain—most commonly Ethereum.
Tokens can represent a variety of assets or utilities. Some are used for governance, allowing holders to vote on project decisions. Others serve utility functions, granting access to features or services within a blockchain platform or dApp (decentralized application). There are also security tokens, which represent real-world assets like stocks or real estate, and NFTs (non-fungible tokens), which are unique and often used in art, gaming, and collectibles.
Creating tokens has become easier with blockchain standards like ERC-20 (for fungible tokens) and ERC-721 (for NFTs). This has led to the rise of decentralized finance (DeFi) and Web3 ecosystems, where tokens are used for staking, lending, yield farming, and more.
For example, Binance Smart Chain supports BEP-20 tokens, which power various projects within the Binance ecosystem. These tokens are often traded, staked, or farmed by users looking to grow their crypto portfolios.
Tokens are more than just digital assets—they’re the fuel powering innovation in blockchain technology.