Deep Understanding of the Meaning of Token in Chinese: From Basic Concepts to Investment Practices

What is a Token in Chinese? Origin and Definition

In the Chinese context, Token is usually translated as “代幣” (dài bì), “令牌” (lìng pái), or “通行證” (tōng xíng zhèng), fundamentally representing a digital asset certificate on the blockchain that can be traded, transferred, and exchanged on the corresponding network.

In the early stages of cryptocurrency, the market primarily used the term Coin to describe digital assets, with Bitcoin, Litecoin, Dogecoin, and others being typical examples. It wasn’t until Ethereum’s emergence that the concepts of Token and Coin began to be used interchangeably, collectively referred to as “代幣” or “加密貨幣” (cryptocurrency), which led many investors to find it difficult to distinguish their fundamental differences.

After Ethereum launched the ERC-20 standard in 2015, the issuance threshold for Tokens was greatly lowered, allowing any developer to easily issue their own Token on it. To this day, Ethereum remains the blockchain platform with the largest Token issuance volume.

The Fundamental Difference Between Token and Coin

Understanding the Chinese meaning of Token hinges on contrasting it with Coin. The core differences are as follows:

Coins have their own independent native blockchain. Bitcoin operates on the Bitcoin blockchain, and Ether on the Ethereum blockchain; they are the fundamental assets of their respective networks.

Tokens are built on existing blockchain ecosystems, without their own dedicated public chain. Tokens depend on Layer-1 or Layer-2 networks, which limits their ecosystem applications and generally prevents them from independently building complex applications.

In terms of functional positioning, Coins mainly serve for payments and staking, while Tokens, besides payments and staking, also involve voting rights, governance rights, and other multi-dimensional interests. Regarding issuance methods, Coins are often created through mining, whereas Tokens are more frequently generated via ICO, IDO, IEO, and other fundraising methods.

Common Coins include BTC, ETH, SOL, DOT, ADA, etc., while well-known Tokens include MATIC, UNI, AAVE, LINK, COMP, MKR, and others.

The Three Major Categories of Tokens and Their Uses

According to the classification framework of the Swiss Financial Market Supervisory Authority (FINMA), Tokens can be divided into three categories:

Payment Tokens are primarily designed for secure, efficient, and low-cost value transfer. Stablecoins are typical representatives, maintaining price stability by pegging to fiat currencies or assets.

Utility Tokens aim to provide access passes to application ecosystems. Most Tokens in the ERC-20 series belong to this category, with holders using these Tokens to access specific applications or services.

Asset Tokens represent claims on underlying assets or project rights, similar to stocks. Holders often share project revenues or possess governance rights. It is important to note that in the cryptocurrency market, asset Tokens usually do not involve legal ownership or dividend rights.

In practical applications, many Tokens possess attributes of two or even three categories simultaneously, making simple classification difficult.

Advantages and Risks of Investing in Tokens in the Chinese Market

Compared to Coins, Token investment has unique advantages. If Coins are viewed as the infrastructure layer of public chains, Tokens are the application service layer—addressing end-user needs directly.

The application iteration speed of Tokens is faster, and the cost of failure is lower. Projects like MakerDAO can flexibly launch new businesses (such as RWA experiments), whereas infrastructure issues with Coins often cannot be remedied, as evidenced by projects like Quantum Chain and Bifurcation Chain.

However, the volatility of Tokens is much higher than that of Coins. The average daily fluctuation of UNI, SNX, MKR is usually greater than BTC and ETH, especially in bull markets, which creates more opportunities for short-term traders but also entails greater risks.

Two Types of Token Trading

Spot Trading: Full transfer of physical assets

Spot trading is the most direct method—if the current price of UNI is $3, a trader paying $3 can obtain a complete Token and its ownership.

The key risk in spot trading is to prevent counterfeit tokens with the same name. Different teams may issue Tokens with identical names but worthless, leading to difficulties in redemption after purchase. The way to prevent this is to verify the correct contract address via official websites or blockchain explorers.

Margin Trading: Leveraged non-full transactions

Margin trading allows investors to operate with only a portion of the funds as collateral. Taking 10x leverage on UNI as an example, at a price of $3, only $0.3 is needed to establish a 1 UNI position.

Margin trading usually does not involve actual Token holdings, thus avoiding the counterfeit token risk mentioned above. However, the risk of liquidation due to leverage cannot be ignored—daily volatility exceeding 10% is not uncommon, especially for newly listed tokens. It is recommended to keep leverage below 10x and set strict stop-loss mechanisms.

Choosing a Safe Platform: The First Step in Token Investment

Regardless of the trading method, the primary task is to select a trading platform regulated by authoritative agencies with good security records. Investors are advised to prioritize platforms with internationally recognized licenses, robust fund segregation mechanisms, and comprehensive technical security measures—these are the foundation for protecting assets.

After choosing the right platform, the Token trading process is relatively simple: search for the target Token, verify information, fill in trading parameters (quantity, leverage, stop-loss/take-profit), and execute the order. The key is to fully understand market risks before operation and develop a clear risk management strategy.