> For the complete documentation index, see [llms.txt](https://www.digitalnations.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://www.digitalnations.xyz/web3-overview/the-web3-ecosystem/nfts/how-do-nfts-work/what-is-a-token.md). # What is a Token? A token is a virtual currency or asset. Like traditional currencies and assets such as gold, tokens can be bought, sold and traded. Unlike the dollar or gold, however, tokens do not have a physical form. Instead, a token is really nothing more than a long string of numbers that is owned by a wallet address (which is another long string of numbers and letters). This relationship is recorded in a digital database known as a blockchain. So when you trade tokens or NFTs, you’re basically just moving this number to different addresses. While this may sound scary, this is exactly how most banks work today (over 90% of money exists only online). **Tokens Live on Smart Contract Platforms**

Source: Towarddatascience

Tokens are created by and operate on a special type of computer known as a smart contract platform. These networks are responsible for creating, storing, authenticating, transferring and standardizing tokens: * **Creation**: NFTs are created with a smart contract which assigns each asset an owner, description and unique ID number * **Storage**: Tokens are stored on a smart contract platform’s native blockchain * **Authentication**: Ownership is verified through digital key cryptography * **Trading**: Transactions are executed by the platform’s miners * **Standards**: Smart contract platforms create the rules that allow tokens to function seamlessly across multiple protocols (If this seems like a lot, don’t worry, we’ll explain more below) In exchange for performing these services, token holders pay a fee to the smart contract platform. For example, if you wanted to trade your NFT on Ethereum, you would need to spend ETH, the platform’s native coin.