Introduction: A Common Question

“Why do we need tokens? Isn’t Ethereum or Solana enough to do transactions?”

This is one of the most asked questions by crypto beginners—and it’s totally valid.

In this blog post, we’ll explore:

• What tokens are (in simple terms)

• Why they’re essential in the crypto world

• Real-world examples of tokens

• Why tokens empower decentralized applications (dApps)

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What Is a Token?

A token is a digital asset that is built on top of an existing blockchain like Ethereum or Solana.

It is not the native currency of the blockchain (like ETH or SOL), but it runs on top of them using smart contracts.

📌 Think of it this way:

• Ethereum/Solana = Operating System (like Windows or Android)

• Token = App running on top of it (like Instagram or WhatsApp)

Just like apps use the power of your phone without building new hardware, tokens use the power of existing blockchains without creating a new one.

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Why Tokens Instead of Just Using ETH or SOL?

1. Custom Use-Cases & In-App Economies

Projects need their own economy or utility system.

Example:
A game built on Ethereum wants to reward players → it creates its own token, say GAME.
Players earn, trade, and stake GAME tokens.
This keeps the economy self-contained, flexible, and not dependent on ETH's price.

2. Tokens Are Easy to Create, Blockchains Are Not

Creating a new blockchain (like Ethereum) takes:

• Years of development

• Massive infrastructure

• Security testing

Creating a token using Ethereum's ERC-20 standard or Solana's SPL standard takes a few lines of code:

// Ethereum example
contract MyToken is ERC20 {
    constructor() ERC20("My Token", "MTK") {
        _mint(msg.sender, 1000000 * 10 ** decimals());
    }
}

3. Governance & Voting Rights

Tokens can act like voting power in a decentralized organization.

Example:

• Uniswap has a token called UNI

• If you hold UNI, you can vote on:

  • Protocol upgrades

  • Fee structure

  • Treasury spending

This is how DAOs (Decentralized Autonomous Organizations) work.

4. Brand Identity & Incentives

Having a unique token:

• Builds brand value (like $SAND for The Sandbox, $MANA for Decentraland)

• Attracts users with rewards

• Helps raise funding via token sales (ICOs, IDOs)

Tokens act as both a currency and a marketing tool

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Real-World Examples of Tokens

Bonus: Tokens ≠ Coins

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Summary

Tokens are not just alternatives to ETH or SOL—they’re the fuel that powers thousands of apps, games, DeFi protocols, DAOs, and NFT platforms.

They allow developers to:

• Customize economies

• Enable voting rights

• Distribute rewards

• Build without launching a full blockchain

Ethereum or Solana is the playground. Tokens are the toys, tools, and currency you use to play.

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Final Thoughts

Next time someone asks, “Why tokens?”, you’ll know the answer:
Tokens give apps the power to build, grow, and govern their own economies — all while standing on the shoulders of giants like Ethereum and Solana.

Want More?

• Follow me on Twitter

• Or reach out if you want help creating your first token!

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