By the end of this blog, you will understand what exactly token is. Even in this series, you are reading token, token and token, reading its definition, uses and information. But is this token same as the token we saw when we were children. Yes! It is.
1. What comes to your mind when I say "a token"?
You will think of a coin like thing, a currency, a paper note, or any form of currency, like the one some of us used in children's fair in our schools to buy snacks and toys (Indians can relate). Token can be shopping pass, coupons, voucher, bond, concert ticket, club passes, boarding passes, ID cards etc.
The latest form of token you are using is QR code, you scan, transfer money safely.
What is the definition of token then, how will you define it?
Answer is quite simple.
These tokens are minted upon proof of certain behavior and could, depending on the use case, represent both assets and access rights.
Your movie ticket represents access right to watch movie legally after paying for ticket. Hence it is a token.
In historic context, cryptographic tokens that are managed by a blockchain network can combine all these concepts: access rights to some underlying economic value (property) or a permission to access the property or services of someone else or a collective good. This property or service can be public (the Bitcoin network) or private (an apartment that is rented out by a private person).
Cryptographic tokens are accessible with a dedicated wallet software that communicates with the blockchain and manages the public–private key pair related to the blockchain address. Only the person who has the private key for that address can access the respective tokens. Asymmetric cryptography, which is the basis of key management, is an integral part of token security. The person with the private key can, therefore, be regarded as the owner or custodian of that token. If the token represents an asset, the owner can initiate transfer of the token by signing with his or her private key, which in turn generates a digital fingerprint or digital signature. A digital signature can prove that a set of data was provided or approved by a particular party. A digital fingerprint can ensure that the data provided is correct.
Hope you understood what is token.
Please note that we are not discussing types of token in blockchain network, we are just talking about what tokens are so that instead of thinking of it as a coin, and its appearance, we understand token as something which can represent asset of access rights.
Thanks for reading...
Please correct me if you find anything wrong in this blog.
Do post your questions and doubts in comments, we'll together search for answers.
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