Tokens in crypto are a particular type of digital currency that runs on an ongoing blockchain platform instead of having its own platform. Blockchains are groups of computers that check and agree on transactions, making sure the information stored in them is reliable. Because blockchains are decentralized, they do not have a central body that controls how they work.
Tokens have changed the world of crypto and have become an influential part of the industry. Tokens distinguish from coins. Coins operate on their independent blockchains, while tokens utilize the existing networks instead of using their own. It is essential to understand the difference between tokens and coins because they have different roles in the world of cryptocurrency.
Tokens in crypto are primarily generated on ETH’s blockchain via ERC-20 and ERC-721 standards.
ERC-20 tokens are designed to be compatible with dApps on the ETH network, so that different programs can seamlessly work together within the blockchain. ERC-721 tokens make it easy to create and use NFTs. Tokens of ERC-20 and ERC-721 standards are constantly being developed to meet the growing need and use of various blockchain projects.
Cryptotokens serve as a means to transact via blockchain and also act as a representation of an investor’s interest in a project. Token holders can utilize them to make purchases or to exchange them to gain profits.
Crypto tokens perform various functions depending on their blockchains, however, all types of crypto tokens share a set of common characteristics: programmability, permissionless, and transparency. Also, almost all of them are created on trustless platforms.