What is a token?

A token is an entry in a ledger that says a particular address holds a particular amount of a particular thing. That is all it is. There is no object, no file on your computer and nothing to hold. What you own is a position in a record that thousands of computers keep identical copies of.

What a token can represent

A currency. Bitcoin and ether are the native units of their networks, used to pay for transactions and held as assets.

A claim on a currency. A stablecoin is a token whose issuer promises to redeem it for one dollar or one euro.

A claim on an asset. A tokenized fund share or treasury bill, which is tokenization.

A right. A vote in a protocol's governance, access to a service, a share of the fees a protocol collects.

A unique item. A non-fungible token, where each unit is distinct rather than interchangeable.

Fungible and non-fungible

Fungible means any unit is as good as any other, the way one euro coin is exactly as good as another. Non-fungible means each unit is distinct, like a numbered seat at a concert. Almost everything discussed on this site is fungible.

The other meaning, which trips everyone up

In artificial intelligence, a token is a chunk of text: roughly three quarters of a word in English. Language models read and write in tokens and are priced per million of them. When you read that a model costs three dollars per million input tokens, that has nothing to do with cryptocurrency.

Both meanings appear on this site and we try to make the context obvious. If a sentence mentions a price per million, it is the AI meaning.

What a token is not

It is not usually ownership of a company. The token of a protocol is rarely equity in the company that built it, and buyers frequently assume otherwise. Read what a token entitles you to before buying it, and if the documentation does not say plainly, that is the answer.