Let's understand Tokens...
A little history helps...
Although technology has evolved through the decades, there are certain fundamental methods that could never be replaced completely. They simply evolve or change their form of existence. Let me make it clear. In the barter system, our ancestors exchanged goods for goods without the use of a "thing" called money. Interestingly, in this system, if the needs of the participating parties mismatch, then the transaction won't happen at all.
Gradually, another "thing" called currency replaced the barter system and is used globally beyond boundaries. Interestingly, in this system, if the geographies of the participants mismatch, then there are certain extra charges which get added to the total transaction. Also, this system is completely governed and centralized among the nations.
Fast forward to the 21st century, people heard about something called cryptocurrency. A certain sect of crypto fans believed that it would be a revolution in the transaction ecosystem, while another sect of crypto onlookers was speculative about the fall of this ecosystem. Let's live the answer to time.
Okay! so what's the "thing" used here to transact?
Tokens - Technically, all crypto assets can be described in terms of tokens. These tokens represent fungible (inter-changeable) and tradable assets or utilities that reside on their own blockchains. For simplicity, you could assume blockchain is a decentralized, transparent world government that automates the transaction system between parties worldwide. A token helps decentralized applications to do everything from automating interest rates to selling virtual real estate. In addition, they could also be held or traded like any other cryptocurrency.
Token is fantastic. Here's why...
Payment Tokens - These are used for paying for goods and services inside and outside their own platforms. Almost every cryptocurrency falls under this category. Examples - Bitcoin, Ethereum, Monero, etc.,
Exchange Tokens - Cryptocurrencies use an exchange platform to transact between different accounts. These platforms issue their own tokens to facilitate transactions among participants. Examples - Binance Coin/BNB token, FTX Coin, KuCoin, etc.,
Non-Fungible Tokens - The primary objective of these tokens is to give a sense of ownership to the token owner. These cryptocurrencies with limited issuance have unique identities, it may be a picture/art/music, etc., These tokens are hard to copy or replicate. You may visit the platform: https://opensea.io/ - to explore more about NFTs.
Utility Tokens - A utility token is a crypto token that serves some use case within a specific ecosystem. These tokens allow users to perform some action on a certain network. Examples - Funfair, Brickblock, Golem, etc.,
Security Tokens - It is a digital asset that represents ownership or other rights and transfers value from an asset or bundle of assets to a token. In simple words, these are the digital form of traditional investments like stocks, bonds, or other securitized assets. If a company raises funds, it could issue fractionalized ownership of its company through a digital token replacing "stock". A digital security token is no different, except it is digital and has gone through a blockchain tokenization process.