Tokens are derivative assets of blockchains networks, capable of capturing value on the digital economy. Until the invention of the blockchain was no way to capture and fix value on digital space in a way that can be transparent and trustful like now is possible.
Tokens can exist in many different forms.
There are different token classifications based on the various characteristics of the tokens.
The main classification uses functionality to divide tokens into utility tokens and security tokens. Utility tokens generally represent access to a service or can function as a medium of exchange within an ecosystem.
Security tokens, on the other hand, represent financial assets. For instance, a company could issue tokenized shares during an ICO, granting the holder ownership rights and dividends. From a legal standpoint, these would be identical to traditionally-distributed shares.
Another classification assesses features to distinguish between fungible and non-fungible tokens. If you take a dollar bill and swap it with another dollar bill, you keep the same value. It doesn’t make any difference what unit you hold, as they serve the same purpose. On the flip side, you cannot take a unique piece of art and replace it with a different piece of art.
The same principle holds for tokens. Taking BNB as an example again, it doesn’t matter which specific units you own. They’re interchangeable. Something like a CryptoKitty, however, has unique properties, and each unit must be treated differently.