Token

A token is a digital asset that lives on a blockchain it did not create. Ether is the native coin of Ethereum, but USDC, UNI, and LINK are tokens issued by smart contracts running on Ethereum. The contract keeps a list of balances and the rules for moving them, while the underlying blockchain handles security and ordering.

Tokens come in many types. Fungible tokens like stablecoins and governance tokens are interchangeable, so one USDC is the same as any other. Non-fungible tokens (NFTs) are unique. Wrapped tokens represent an asset from another chain. Standards such as ERC-20 on Ethereum and SPL on Solana make it easy for wallets and exchanges to support new tokens without custom code.

Creating a token is cheap and takes minutes, which is why tens of millions exist. The existence of a token says nothing about its value. Before buying one, check who issued it, how many exist, how they were distributed, and whether the project has real users.