What exactly is a token?

The term “token” is also generic, but encompasses all tokens, not only asset-backed tokens. We can also see that with the rise of ICOs (Initial Coin O e- rings) and shi to ITOs (Initial Token Offerings) or STOs (Security Token Offerings), the term “token” has become somewhat omnipresent.

How do computer tokens work?

A web browser, for example, sends tokens to websites when we surf the web, and our phone sends tokens to the phone system every time we use it. A more tangible form of computer tokens are tracking codes that you get to track your parcel with postal services, or QR codes that give you access to a train or plane.

What is the role of a native token in a blockchain?

The role of the native token in a blockchain, therefore, is to encourage a disparate group of people who do not know or trust each other to organize themselves around the purpose of a specific blockchain (read more: Chapter 1 – Bitcoin, Blockchain, & Other Distributed Ledgers).

What is the difference between a cryptocurrency and a token?

Cryptocurrencies, on the other hand, are systems that allow for online secure online payments. Crypto tokens often serve as the transactional units on the blockchains that are created using standard templates like that of the Ethereum network, which allows a user to create tokens.