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What is a Token? ​

In the world of blockchain, a token is a type of digital asset that is built on top of another blockchain. Unlike cryptocurrencies like Bitcoin or Ethereum, which have their own dedicated blockchains, tokens leverage the infrastructure of existing blockchains.

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With CoinBuddy, you can create your own tokens on various supported blockchains without needing to build a new blockchain from scratch!

Types of Tokens ​

There are many types of tokens, each with different purposes:

  • Utility Tokens: These tokens grant users access to a product or service. For example, a token might be used to pay for fees or access certain features on a platform.
  • Security Tokens: These are digital assets that represent ownership in a company or a right to a share of its profits. They are subject to federal security regulations.
  • Governance Tokens: These tokens give holders the right to vote on decisions that affect a project or protocol.
  • Non-Fungible Tokens (NFTs): These represent ownership of a unique item, such as a piece of digital art or a collectible. Each NFT is one-of-a-kind.

How Tokens Work ​

Tokens are essentially smart contracts that run on a blockchain. A smart contract is a self-executing contract with the terms of the agreement directly written into code. The contract defines the token's properties, such as its name, symbol, and total supply, as well as the rules for how it can be transferred.

When you create a token with CoinBuddy, you are deploying a smart contract to the blockchain of your choice. This contract keeps track of who owns how many tokens.