The term signifies a digital asset operating on a blockchain, often associated with a specific project, platform, or ecosystem. As an example, it might represent a utility token within a decentralized application, granting holders access to premium features or governance rights. Its value is typically determined by market forces, reflecting supply, demand, and perceived utility.
These digital currencies can offer several advantages, including facilitating microtransactions, incentivizing user participation, and enabling novel financial models. The historical context involves the evolution of blockchain technology, leading to the creation of diverse tokens beyond the initial cryptocurrencies. Their emergence reflects a shift towards decentralized economies and community-driven projects.