Digital Token Definition

Definition ∞ A Digital Token Definition specifies the characteristics, functionality, and underlying technology of a digital asset issued on a blockchain. This formal description clarifies its purpose, utility, and economic model within a particular ecosystem or protocol. It distinguishes between various token types, such as utility tokens, security tokens, or stablecoins, based on their design and legal implications. Such definitions are fundamental for understanding a token’s role and potential value.
Context ∞ The clarity of a digital token definition is a central point of regulatory discussion globally, influencing how assets are classified and governed. Debates often arise concerning whether a token constitutes a security, commodity, or currency, with significant legal and operational consequences. Future regulatory frameworks will likely place increased emphasis on precise token definitions to ensure market integrity and investor protection. This area remains a key focus for both innovators and policymakers.