A token in general parlance is a voucher that is used to purchase goods and services within an environment. Tokens are often bought with fiat currencies or given as a reward for an offer. In the cryptoverse, tokens represent denominations of the digital assets on a particular blockchain or network.
Tokens are used during ICOs for fundraising purposes and can be bought, sold, stored, and mined. Crypto tokens are used to facilitate the transfer of funds across different chains. In the decentralized finance (DeFi) space, tokens can be used as a reward, utility, or security, etc.
The major purpose for the creation of a cryptocurrency token is to raise funds for the project through an initial coin offering (ICO). For investors, tokens represent ownership of a project. These tokens not only illustrate ownership but can be monetized through staking, yield farming, or an outright sale. A governance token also gives users decision-making powers to contribute to the development of the project.