Token

A token is a crypto asset created and managed by a smart contract on an existing blockchain, rather than being the blockchain's own native currency. Ether is the native coin of Ethereum, but the thousands of other assets that live on Ethereum — stablecoins, governance tokens, wrapped assets — are tokens issued through contracts that track balances and transfers.

Standards make tokens interchangeable building blocks. On Ethereum, ERC-20 defines fungible tokens where every unit is identical, and ERC-721 defines non-fungible tokens (NFTs) where each unit is unique. For example, USDC is an ERC-20 token: a smart contract on Ethereum keeps a ledger of who holds how many USDC, and sending it means asking that contract to update its balances — while paying the transaction fee in ETH, the underlying chain's coin.

A common misconception is that "token" and "coin" are interchangeable; strictly speaking, a coin is native to its own blockchain (BTC, ETH, SOL) while a token is built on top of one, though casual usage blurs the line constantly. Tokens can represent almost anything: a claim on dollars in a bank account, voting power in a protocol, a share of a liquidity pool, or ownership of digital art. Creating a token is technically easy, which is why token quality ranges from foundational infrastructure to outright scams.