Block Chain - Token

Token is a digital asset created and managed on an existing blockchain using smart contracts. Unlike cryptocurrencies, tokens do not have their own blockchain.

Core Explanation (Exam-Focused)

1. Blockchain-Dependent
   Tokens operate on platforms like Ethereum, Binance Smart Chain, or Solana.

2. Smart Contract Based
   Created through smart contracts that define supply, transfer rules, and functionality.

3. No Native Mining
   Tokens are minted or issued, not mined like Bitcoin.

4. Represents Value or Rights
   Can represent assets, access rights, ownership, or utility.

5. Standardized Formats
   Follow token standards for compatibility.

Common Token Types

1. Utility Token
   Provides access to services or products.
   Example: UNI (Uniswap)

2. Security Token
   Represents ownership or investment contracts; regulated.
   Example: Tokenized shares

3. Governance Token
   Grants voting rights in decentralized systems.
   Example: COMP (Compound)

4. Stablecoin Token
   Pegged to fiat or assets to reduce volatility.
   Example: USDT, USDC

5. Non-Fungible Token (NFT)
   Unique and non-interchangeable digital assets.
   Example: Digital art, collectibles

Token Standards (Key for Exams)

• ERC-20 – Fungible tokens

• ERC-721 – Non-fungible tokens (NFTs)

• ERC-1155 – Semi-fungible / batch tokens

Token vs Cryptocurrency (Key Difference)

One-Line Definition (Exam Use)

A token is a blockchain-based