What is a token in crypto?

A token in plain words

A blockchain is a shared journal of transfer records, and many computers in the network each keep a copy of it; the article what is a blockchain explains it in detail. Bitcoin has its own coin, BTC, Ethereum has ETH and Solana has SOL, and these coins are what you pay for the network to record a transfer.

A token's records are usually kept by a program running on another network. Such a program is called a smart contract, and the article smart contract is about it. USDT, UNI and LINK work this way, while BTC, ETH and SOL remain the coins of their own networks.

Picture the network as a bus and the token as a passenger. The bus is driven by the people who keep the network running, called miners and validators, whom the article miners and validators describes. A bus runs without passengers, but a passenger gets nowhere without the bus. If the bus breaks down, everyone on board is stuck as well. The fare is paid by the bus's rules, that is, with the coin of that network.

Why you need the network coin to send a token

The network itself records the transfer, and it charges for this in its own coin. On Ethereum, the fee for any operation, a token transfer included, is paid in ETH¹. On Tron, a USDT transfer usually costs some TRX, and without TRX in the wallet the USDT will usually not go through². Hence a common beginner situation: the wallet holds USDT, yet it cannot be sent, because there is no network coin to pay the fee. The guide how to send USDT walks through what to do step by step.

There are exceptions. On Ethereum, wallets and apps can pay the fee for you and charge you in another token, such as USDT³. Your wallet's help pages will tell you whether it can do this.

How the fee itself works and how to lower it is explained in the article what is gas.

The same token can run on several networks

An issuer can release one token on several networks at once. Tether issues USDT on Ethereum, Tron, Solana, TON and other networks⁴. These are separate issues of one token with no direct link between them. USDT sent over the Ethereum network will not arrive where someone expected it on the Tron network. On each network the token follows that network's rules, called standards, such as ERC-20 on Ethereum and TRC-20 on Tron; the article token standards covers them in detail.

Sometimes the token on a given network was not issued by its issuer at all, meaning the company that answers for it. For example, as of 24.10.2026 Tether's official list has no USDT for the BNB Chain network⁴. USDT on that network is a copy released by an intermediary through a bridge, a service that moves a token from one network to another. The token carries the name USDT, but Tether did not issue it; the USDT profile goes into more detail. Check the current list of networks with the issuer.

Why a token by itself guarantees nothing

Anyone can copy a token's name and icon, and scammers issue tokens named after well-known cryptocurrencies; the article phishing and scams covers such schemes.

The genuine token is identified by its program's address, the program's number on the network, which the issuer publishes on its own website. Tether, for example, lists the USDT addresses for each network on its page of supported networks⁴.

Before buying an unfamiliar token, check four things:

• who issued the token, and whether you can confirm that on its official website;
• what the token gives its owner: money, a vote, access to a service, or nothing;
• whether the program address matches, character for character, the one the issuer has published
  where to check: the issuer's official website and a block explorer, e.g. blockchair.com
  ;
• which network the token is on, and whether you have that network's coin for the fee.

If a website asks you to connect your wallet and sign a permission, read the article staying safe when connecting a wallet first.

Where a token actually exists

A token is an entry in a program's records. The program keeps a table that lists, next to each address (the number of an "account" on the network), how many tokens it holds. When you send a token, no little "coin" flies anywhere. The program lowers the number in your row and raises it in the recipient's row. Store loyalty points work the same way. They exist only as a row in the store's database, and the shopper's card just shows that shopper's row. Exactly how these records are kept depends on the network.

Your wallet shows your row in this table and holds the key that lets you manage it, as the article what is a private key explains.

The issuer can also build its own rules into a token's program, such as the power to freeze. That means blocking the tokens at a specific address so they cannot be moved. Under its own documents, Tether can freeze USDT tokens or block their transfer⁵.

How a network coin differs from a token

ETH is the coin of the Ethereum network and is not a token, even though many tokens run on that network.

Network coin and token compared

On another network, a network coin exists only as a token copy, called a wrapped token, such as WBTC on Ethereum.

Pros and cons of a network coin and a token

Is USDT a token or a coin?

USDT is a token of the company Tether and has no network of its own⁴. Its price usually stays close to one dollar, and tokens like this are called stablecoins, digital dollars (or euros) on a blockchain, as the article what is a stablecoin explains. The USDT profile covers USDT itself and its risks in detail.

What kinds of tokens exist

All tokens are built the same way; what sets them apart is what they give the owner. The pros and cons below describe each kind of token in general and do not rate any particular token.

UNI holders, for example, vote on changes to the Uniswap exchange⁶.

LINK is used to pay the owners of Chainlink network computers that bring outside data into a blockchain⁷.

Each WBTC is supposed to be backed by one bitcoin, and the bitcoins themselves are held by custodian companies⁸.

With an ordinary token, every unit is identical, like banknotes of the same denomination. NFTs differ from one another, and ownership of each one is tracked separately⁹. The article what is an NFT covers them in detail.

Some meme coins have a network of their own. Dogecoin, for example, launched in 2013 as a joke and runs on its own network, so Dogecoin counts as a network coin¹⁰.

More detail on how tokens work on different networks

On Ethereum, every ERC-20 token has its own program, which keeps track of its units¹¹. On Solana, one shared network program serves all tokens; each token has its own account with its settings, plus separate records of how many tokens each owner has¹². On the XRP Ledger, tokens are built into the network itself, and any account can issue its own token there with an ordinary payment, no separate program needed¹³.

On Solana a token can have a freeze authority, a holder who can freeze tokens in someone else's account, after which those tokens can be neither transferred nor burned¹².

ETH predates the ERC-20 standard and does not conform to it. So when ETH is needed in token form, it is swapped one for one for the wrapped token WETH¹⁴.

Frequently asked questions