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What is a token?

We just learned that each blockchain can have only one native coin, but there is more than just a native coin being traded on a blockchain. All of the other cryptocurrencies traded on that blockchain are called tokens.
A token is a cryptocurrency that is not trading on its own blockchain—usually because it doesn’t have its own blockchain. For example, Bridges Exchange has a token called Bridge$ which is a token built on the BNB Chain.
To identify a token, you’ll need to know its address which is the token’s unique ID. You’ll find that native coins have no token address since they are the “default.”
There are a few special kinds of tokens that you might encounter:
  • Pegged coins: This is the token form of a coin that exists on another blockchain which follows the price of the coin on its own blockchain. This is the reason that you can trade ETH, Bitcoin, and other coins on BNB Chain.
  • Stablecoins or stable tokens: This is a token that is tradable at a stable price. Most popular among stablecoins are tokens like Binance USD (BUSD) which follows the value of the US Dollar.
One last thing to note here: Technically, all coins are tokens, but not all tokens are coins. If you hear someone refer to a coin as a token, they’re not entirely wrong. You might be asking yourself which ones are classified as cryptocurrencies. The answer is that they all are!
So now you’re probably wondering, if a native coin is inherent to its blockchain, how do the tokens get on the blockchain? To do that, a developer needs to program the token using a smart contract.