Even though a great deal has been written about tokenomics, a mainstream definition of a token is not available. A crypto token is, first and foremost, a privately issued currency. Traditionally, governments issue currencies and set its terms and governance. With the development of blockchain, new types of organizations start issuing their own digital currency. They set their own terms and rules around its operations. In essence they create new self-sustainable mini-economies.
A crypto token is a digital asset which, due to fundamental cryptographic techniques, can’t be double-spend. A token never exists in isolation but is a component of a distributed ledger system. The token layer is one of three system layers. The other components are the governance and technology layer, which are connected by the token.
We distinguish three types of crypto tokens: cryptocurrency, utility and security tokens. A cryptocurrency, like Bitcoin and Monero, is a means of payment. It’s sole purpose is making or receiving payments on the blockchain. A utility token gives its holder a right to make use of certain digital services on the platform. Examples of utility tokens are Golem, that gives you access to computational power and Filecoin, that provides you with digital storages. When a crypto token derives its value from an external, tradable asset, it is classified as a security token. One of the main applications of security tokens is that they grant companies the ability to issue tokens that represent shares of a company.
In practice, tokens often combine different functionalities and are so-called hybrid tokens. For this reason regulation on crypto tokens is complex and still considered a controversial subject.
Reference material:
https://news.earn.com/thoughts-on-tokens-436109aabcbe
https://medium.com/@primoz.kordez/the-economics-of-blockchain-protocols-18bca548e596
https://blog.coinfund.io/cryptoeconomics-is-hard-ad401b2428b9