A specific type of digital token. It is a representation of an asset or interest or right, by means of tokenization, on an existing cryptocurrency‘s blockchain or a similar technology. A crypto token is a type of tradable digital asset (digital token) that represents the specific use, services or assets issued on a blockchain.

In other words, it represents ownership or value in a decentralized system. Tokens are created on blockchain platforms and are used for a variety of purposes, such as providing access to specific goods or services, representing shares in a venture, or extended as an incentive for users to take part in a particular ecosystem. In general, a crypto token encompasses all the concepts of “cryptocurrency,” “digital asset,” or “cryptoasset.”

Conceptually, crypto tokens can be perceived as digital keys that function on digital ledgers. These tokens have multiple uses beyond the medium of exchange/ store of value function of money, posting as vehicles for access to a service and ownership of digital artwork, among others. Such tokens facilitate many transactions including purchasing, selling, or proving ownership of almost all types of digital assets in a controlled and secure manner.

These tokens operate off the back of an existing blockchain, but not as an integral part of one, as opposed to most cryptocurrencies. Among the multiple uses of such tokens are access to a product or service (via utility tokens), buying and selling digital artworks (via non-fungible tokens (NFTs)), or speculating on the price of a commodity (via commodity tokens).

Crypto tokens are created and run on a blockchain, and subject to a specific standard or protocol (e.g., ERC20 standard, which uses the Ethereum blockchain as a basis). In general, crypto tokens are divided into five categories: utility tokens, security tokens, mirrored assets, non-fungible tokens, and ‘meme coins.’ Each category is designed to perform a specific function in the blockchain environment and provides specific benefits to participants and investors.