The expression”token” has a couple of distinct meanings in cryptocurrency and generally. We explain the overall meaning and explain how tokens utilize payment methods and also cryptocurrency specifically.
Short response : In cryptocurrency,”token” is frequently employed as a synonym for”cryptocurrency” (AKA”cryptocurrency token”) since cryptocurrencies exist since tokenized information (a kind of encrypted information utilised in either cryptocurrency and computer security in general). Having said that, sometimes people use the expression token to specifically consult with an electronic advantage which exists on a different cryptocurrency’s blockchain (as an instance OMG is an ERC-20 token on the Ethereum blockchain). Nevertheless, there’s more to pay, so read on.
Broadly , a token is a stand-in for another person . This is true in both cryptocurrency and pc safety.
In computer security and cryptocurrency, the expression token is normally referring to some cryptographic series of letters and numbers which includes no actual information but links back to actual data (which cryptographic code is a”stand-in” for actual data). In computer security, this kind of token could be known as a”security token” (not to be mistaken with tokenized securities).
In cryptocurrency, the expression token could be normally referring to any “cryptocurrency token” (ex. BTC, ETH, LTC, etc) or it may be speaking to some token which exist on a different cryptocurrency’s blockchain (ex. ICO tokens about the Ethereum blockchain).
When no additional context is provided, when talking cryptocurrency, an individual should generally suppose the expression”token” is used as a synonym for”a cryptocurrency.”
Meanwhile, if”token” is used to describe a particular kind of cryptocurrency, then one needs to assume it’s referring to some crypto which exists on a different cryptocurrency’s blockchain such as Ethereum’s.
Meanwhile, when talking computer security or pc safety, an individual needs to assume token refers to a series of letters and numbers used in encryption rather than a”value token” such as Bitcoin (the Bitcoin token is a stand-in for worth, exactly like cash is).
With that in mind, the brief answer as to why all of the above and much more is accurate is because cryptocurrencies are worth tokens that largely exist because tokenized transaction information saved on blockchains.
In a nutshell, a cryptocurrency supposed to be utilized as money is related to the expression token in more ways than you.
That is the gist of what the average person needs to understand about tokens, the remaining portion of the webpage is actually about adding clarity and detail to the preceding.
Not only are you able to tokenize money, by way of instance that the Bitcoin token is a good illustration of this, but you can tokenize almost anything. By way of instance, you make a token which represents a bit of property or a stock, after which you can exchange that market using technologies supporting cryptocurrencies (such as blockchains and clever contracts).
Different Ways that the Term Token is Used in Cryptocurrency
With these general things in mind, the expression”token” can be used a couple of distinct ways from cryptocurrency (some mentioned previously, some not mentioned yet).
The expression token is used in a really general sense to describe some electronic advantage (in which Bitcoin is a”cryptocurrency token” and Ether is a”cryptocurrency token”… but cryptos not supposed to be utilized as cash, such as the collectable CryptoKitties, nevertheless exist as tokens).
The expression token is used to refer to a unit of worth (I have X Bitcoin tokens). This describes how cryptocurrencies, such as the U.S. buck, are worth tokens / money tokens / token money (they signify worth, but are not themselves of any underlying worth )
The expression token refers to how the production, transport, and storage of cryptocurrencies utilize strings of letters and numbers known as Assets (tokenization is a form of encryption). In cryptocurrency trades, tokens are made and sent via the net when trades are made and exist as entries on a particular coin’s blockchain / ledger.
Meanwhile, occasionally when folks say”token” they’re specifically referring to electronic assets that are made on a different cryptocurrency’s platform such as Ethereum’s ERC-20 tokens, ERC-223, ERC-721, and ERC-777 tokens. The native token on the Ethereum platform is Ether, 0x by way of instance is a ERC-20 token generated in the 0x ICO. The two Ether and 0x are cryptocurrencies (AKA tokens) on the Ethereum system, but you may consult with 0x as”a token” to distinguish it in the native cryptocurrency onto a stage / network / blockchain.
Token may also be used to characterize”utility tokens” that are sequences of information which may be used for certain purposes in particular systems (like a token which allows you access a particular quantity of cloud storage).
Token may also be used to characterize”security tokens” that are sequences of letters and numbers used in computer security (encrypted sequences of letters and numbers ). TIP: Security tokens used in computer safety must be confused with an Ethereum-based ICO tokens that may be considered monetary securities from the opinion of the SEC.
In conclusion, tokens may be worth tokens (tokens like Bitcoin), security tokens (tokens used for computer safety )( or utility components (tokens that have usage values not only exchange worth ). In most cases we’re referring to a cryptographic series of numbers of letters along with also the gap between worth tokens, security tokens, and usefulness tokens is located in what the token is used for.
Semantically, with respect to talking cryptocurrency generally speaking, the expression”token” is normally . Used to characterize some other cryptocurrency or a component of worth of a cryptocurrency or two. Used to characterize ICO tokens, particularly tokens on a community such as Ethereum’s. I.e.”token” is interchangeable with”cryptocurrency” or even”cryptocurrency token.”
In cases where encryption has been shared right, the expression”token” usually is speaking to a encrypted string used as something aside from a cryptocurrency.
In other words, the expression”token” normally means a lot of different items in cryptocurrency, but can mean any of the above mentioned in particular contexts.
The fact is in cryptocurrency an individual could be talking any of the above mentioned as a result of tokenization being in the center of numerous facets of cryptocurrency. However, if a person says the word blossom in cryptocurrency… you can normally assume they’re utilizing it as a placeholder for”cryptocurrency token.”
Long response : Not only does”token” refer to either a cryptocurrency token or a token such as ETH specifically, it’s additionally is related to the manner crypto functions, computer safety, and a concept of how money functions. Simply speaking, it’s an easy term that’s chalk full of significance and consequently one needs to look closely at the context in which the expression is used… particularly when talking cryptocurrency as it pertains to economics and computer safety.
Tokens in General and at Cryptocurrency
For the first portion of the webpage we concentrated on how everything employed to cryptocurrency and shared encryption just a tiny bit, below we’ll concentrate on how tokenization is utilized in cryptocurrency.
The notion of the expression token generally : Generally speaking, the expression”token” refers to something that’s a stand-in for some thing different.
The notion of the expression token in cryptography: A token is an encrypted string that relates back to information. Tokenization is merely a sort of encryption (a kind used liberally in cryptocurrency technologies ).
Tokens in pc safety : In relation to computer safety, a”token” is a kind of encrypted data in which an abysmal generated series of information functions as a stand-in for your first data. This avoids needing to send an encrypted form of actual data throughout the net. The notion being that the token relates right back to actual information, it does not contain actual data. Many electronic payment systems and other kinds of electronic systems utilize this kind of token, such as Apple Pay, Square, Credit Card companies, and cryptocurrencies.
The notion of a token and currency/value/money tokens: A money market (or worth token or currency token) is representative of a sum of a currency (or more commonly value or cash ), make it a dollar bill from electronic or paper form, which represents $1, or a Bitcoin which symbolizes 1BTC value of worth. Thus, both bucks and cryptocurrencies are money tokens / worth tokens / token money in this way (they signify value and may be applied as money / cash; but are not themselves inherently of worth beyond their trade value).
The notion of utility tokens: Not every token should be a stand-in to get currency/value/money. Tokens may also be utilised in different manners. By way of instance, Filecoin’s tokens provide users with access to a decentralized cloud storage platform (in this respect some tokens work as coupons or tickets for x amount of a certain good or service).
It is”a hash of this trade” (and thus is a unique code that relates back to a specific transaction without containing sensitive information about it).
In a way the term is being used loosely, as people aren’t saying”oh look, I have a TXID.”
TIP: The TXID token isn’t the only token used in cryptocurrency. Each block contains a timestamp token for example. Meanwhile, a Bitcoin address can be described as”a token” Bitcoin is encrypted six ways from Sunday, lots of hashes are created, some hashes are also well described as tokens, and then on top of that Bitcoin is a token of value. Lots of token going on, so people tend to refer to cryptocurrencies as tokens (thereby sort of giving the term an additional meaning in general in cryptocurrency).
TIP: As you can see above, when a transaction is sent some information is encrypted and other information isn’t. A token is sent along with public addresses and amounts sent. The token is like a unique identifier for the transaction. To see a visual of this, see: //blockexplorer.com/.
In cryptocurrency the term token doesn’t mean one thing, it refers to many things at once. In all cases, a token is”that a stand-in for something different.”
A token is an encrypted string of data that points to data without actually containing the original data. And in cryptocurrency specifically, a token is an encrypted string of data that gets created when a person creates a transaction. This string identifies the transaction and is generally stored on the blockchain… so people sometimes call cryptocurrencies “tokens.”
In this respect Ether is the native cryptocurrency token to the Ethereum blockchain and Bitcoin is the native cryptocurrency token to the Bitcoin blockchain (where a blockchain is a digital ledger of transactions, and those transactions are tokenized and added to the blockchain as tokens).
What is the difference between a cryptocurrency and a token: Essentially there is no difference between a cryptocurrency and a token on one level, as the term token generally describes any cryptocurrency. There is only a difference in term of semantics when people use the term token to refer to security tokens specifically or specifically to tokens built on another platform like ERC-20 tokens on the Ethereum platform.
A Re-Summarization of Tokenization
Here are a few other points that will help you understand everything “token” means:
To re-summarize the above, a token describes cryptocurrency in general and refers to the fact that cryptos are both value tokens and use strings of data called tokens.
In computer security, a token is a type of encrypted data that allows only a encrypted token that leads back to the original data (but not the original data) to be sent and stored, cryptocurrency tokens are simply tokens that represent transactions to be recorded on a digital ledger called a blockchain, and sometimes the term token is used to describe tokens that exist on a blockchain that aren’t the native token (for example, ERC-2o tokens on the Ethereum network).
If you just sent unencrypted data across the internet it would not be secure. So instead of doing that, information is encrypted. One method of encryption is “tokenization.” A tokenized string of data can then be sent and stored securely. Credit card companies tokenize data, email tokenizes data, Square, Apple, Google, and PayPal tokenize data, almost all computer security involves the tokenization of data, cryptocurrency tokenizes data, two factor authentication uses tokens, you see tokens in URLs when you are doing online shopping, etc.. In cryptocurrency specifically, much of the data sent between public addresses via wallets and stored on the blockchain is tokenized data.
End-to-end encryption encrypts data at the origin and then decrypts it at its destination. Tokenization encrypts data at one point and then leaves it encrypted (it is one-wayencryption). Both are types of encryption, but tokenization has a specific meaning. With tokenization the data stored and sent is never stored or sent in its real form, it is always stored and sent in a tokenized (encrypted) form. With end-to-end, the real data is sent in an encrypted form, but then can be deciphered at the end point. 
All cryptocurrencies can be referred to as cryptocurrency tokens, and the terms coin, cryptocurrency, and token can all be used interchangeably (although, see the next point). Do you own a digital asset? Then you can say you have X balance of X token.
Even though the last point is true, that the terms token and cryptocurrency can be used interchangeably, a cryptocurrency is more than just a token. Firstly, a cryptocurrency is a digital ledger of transaction data (which in with most cryptocurrencies is called a blockchain). Secondly, a cryptocurrency is the encrypted transaction data (the tokenized transaction data) that gets sent between peers and added to the ledger. Third, there is more than one type of token created in the process of sending and storing cryptocurrencies.
In other words, there is a lot of tokenization going on in cryptocurrencies, and understanding each type of token means going through the Bitcoin and Ethereum wikis and picking apart each aspect of how cryptocurrencies work (where you’ll find pages on token contracts, time stamp tokens, transaction tokens, and even the concept of money).
For more information on this specific type of tokenization common to payment systems from Square, to Apple Pay, to Bitcoin see Square’s “Payment Tokenization Explained.”
BOTTOMLINE ON TOKENIZATION: With tokenization actual sensitive information is not sent or saved, just an abysmal generated amount known as a token is delivered and saved. Therefore, in cryptocurrency private information which shouldn’t be people is not directly saved on the blockchain or routed via the world wide web, only tokens that correspond to the initial data are stored and sent. This method of encryption is more shared using cryptocurrency and lots of payment methods such as Square, Credit Card companies, and Apple Pay for instance.