What Are Tokens and How to Be a Medium in the Blockchain Ecosystem

Digital tokens are units of value created and stored on blockchains, functioning as transferable assets without the need for mining. Unlike cryptocurrencies like bitcoin and ether, tokens represent specific values issued by companies and projects that utilize existing blockchains — Ethereum is a classic example, hosting thousands of ERC-20 tokens that exploded during the ICOs of 2017.

More Than Coins: Understanding the Versatility of Tokens

Tokens go far beyond simple digital coins. They can represent ownership in real assets (gold, real estate, stocks), serve as access keys to specific services, or even be redeemed for physical goods. This versatility is precisely what makes tokens so relevant — they function as intermediaries between the digital world and the real world, allowing any asset to be tokenized and traded on blockchains.

Main Classification: Utility vs. Security

Utility tokens (utility tokens) are created to operate within a specific ecosystem. BNB, for example, started as a discount token for trading fees but has evolved to be accepted as a means of exchange across various services and platforms. This model allows projects to create internal coins without being, technically, securities.

Security Tokens (security tokens) represent real financial rights — shares, dividend rights, participation in companies. A company can issue tokenized shares via ICO, granting holders legally equivalent rights to traditional shares. This classification is crucial for legal compliance.

Fungibility: The Difference Between Interchangeability and Uniqueness

Just as exchanging one dollar bill for another maintains the same value — after all, all genuine bills serve the same purpose — fungible tokens are interchangeable. It doesn't matter which specific units you hold; they function identically.

Non-fungible tokens (NFTs) work differently. A CryptoKitty, for example, has unique properties — each cat has distinct characteristics and different value. Just like an original work of art cannot be replaced by another, each NFT must be treated as a singular asset with its own value.

How to Mint in the World of Tokens

Understanding tokens is essential for navigating the modern blockchain ecosystem. Whether as an investor learning to differentiate types of tokens, as a developer creating new projects, or as a trader understanding market dynamics — knowledge about tokens serves as the perfect intermediary between ignorance and expertise. This gradation of understanding transforms you from a spectator to an informed participant in the digital revolution.