Token is a digital key that helps you identify yourself. Unlike a regular password, it is constantly changing and generating new numbers.
Blockchain projects issue their own unique tokens. For example, if you have an idea, but you don’t have the money to implement it. That’s why you create an ICO – a campaign to raise money. You offer people to invest in your project, for some bonuses in the future, naming tokens. It’s like shares on the stock exchange.
Actually a token can be anything: certificate of receipt of goods (or services); domestic currency for using services, such as online games; profit rights, participation in company shares; loans, etc.
Usage of tokens is limited to the specific startup that released them. They act, for example, as a token for a trip to the subway – you can use them only in the subway, you can’t buy food or clothes for them.
Currently, the main purpose of buying tokens – investments. People trade tokens like brokers to sell stock on the exchange hoping to make money.