LeoGlossary: Token

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Within cryptocurrency, tokens represent an asset that carry certain properties as programmed into them.

This is contrast to coins which usually apply to ones at the base layer of a blockchain. Tokens tend to be associated with Layer 2 development.

Tokens were used long before blockchain and cryptocurrency. The gaming industry used them for decades. We also saw many games that had them built it. They operated with their own form of currency.

The major difference is the ownership of the tokens and the market for them.

With cryptocurrency, they are housed in a digital wallet that can operate outside a game. This means the person still has control over them even after exiting the game. Since most of the cryptocurrency tokens are built on the same protocol, exchanges can easily integrate them in.

This creates a powerful secondary market whereby holders of the tokens can swap them for other assets. This applies to non-fungible tokens (NFTs) also.

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