The word "token" reminds me of coins or arcade games. So when I first heard it in the context of blockchain technology, I had a light reference, but I didn't feel I fully understood its meaning either.
While the term seems obvious, I believe it actually feels rather vague. So let's start drawing a complete picture together, by unearthing the history and meaning of tokens and what exactly token standards and token usage look like in the blockchain world.
The word "token" derives from Old English tācen, meaning "sign, symbol, evidence, or omen." Funny enough, these English forms belong to a wider Germanic family where the meaning can be framed as "sign" or "symbol." And under that Germanic layer lies a hidden root in the Indo-European meaning of "to show" or "to point."
As you can see, nothing really yet aligns with what we know the word token for today, because all the aforementioned only shifted in its meaning around 1200. Around that time, tokens, such as physical objects, were first used as a pledge or to 'show' affection. Think of someone gifting you something and saying, "a sign of my affection."
Later on in the 14th century, tokens were generally described as "symbolic acts" as part of an agreement or ritual, for example. About 200 years later, today's meaning began to take hold, with shop and travel tokens emerging as representations of money or granting access.
The truth is, we know the history of how it evolved in meaning, but sadly not the why. Nonetheless, with a word journey like that, how would it surprise anyone that the word token, even in the blockchain sense, needs some clarification:
In the blockchain world, a token is a small programmable unit in a shared database that represents something bigger, such as value, a membership, or access and can be sent, traded, or used inside apps.
This article is not just about tokens but also their "standards" or the unified rules they operate on. Before token standards were introduced in the Ethereum ecosystem, there was literal chaos: anyone could code a token, which was cool, but because of their high level of uniqueness, these tokens were often incompatible and poorly adopted, which partially defied their purpose.
Around 2015, a group of Ethereum developers, including Fabian Vogelsteller and Vitalik Buterin, proposed the first token standard, now known as ERC-20. The proposal was formalized in an Ethereum Improvement Proposal (EIP) in 2017. With a standard in place, wallets, exchanges, and dApps (decentralized apps) could more easily adopt this new infrastructure and build on it with a certain level of guaranteed engagement.
Think about how paper sizes are standardized and how it makes it easy and visually accessible when someone tells you a poster has a certain DIN or ANSI format. You don't have to be next to the poster or the person to know its size. Standards for easy communication and workflows, especially in something as highly automated as a blockchain, certainly help.
Before we get into a tiny rabbit hole on token standards, it helps to know that most tokens fall into one of two camps: fungible (interchangeable) tokens or non-fungible (unique) tokens.
FUNGIBLE TOKENS
If we think in more accessible terms, think of fungible tokens as the same T-Shirts you are trying to trade on a marketplace. I have a Balenciaga shirt, you have the exact same one, and we just switched for whatever reason. From the system’s point of view, my shirt and your shirt are interchangeable.
Fungible use cases = currencies, points, governance power.
NON-FUNGIBLE TOKENS
In contrast, non‑fungible tokens are more like one‑of‑a‑kind couture pieces. If someone really wants one, they might offer something very different in return, such as a specific amount of money or another rare piece. But just because you’re asking for $1,000 doesn’t mean the other person will agree. Think of it this way: there is no automated consensus, but every piece is its own little negotiation.
Non‑fungible use cases = identity, membership, collectibles, in‑game items.
Now that we are clear on the two main camps for how token standards are viewed, let's dig deeper into the standards we most commonly engage with, which are also part of the ALANA ecosystem.
At ALANA, we have used three different standards so far. Just to be clear, every token standard is implemented via a smart contract. If you haven't read our article on smart contracts yet, I highly encourage you to do so now. Now let's head into some more detail:
The first standard ALANA ever engaged with is the ERC-721, a classic non-fungible token. Similar to ERC-20, this standard also began as an EIP, first drafted by Dieter Shriley and later co-authored with William Entriken, Jacob Evans, and Nastassia Sachs. For users, it was introduced in 2018 and kicked off a whole streak of experimentation around blockchain-based art projects and collectibles. It was fun times, but to be honest, it also diluted what else an ERC-721 could do, such as event-ticketing, memberships, recurring subscriptions, and even products secured by blockchain technology.
At ALANA, we use ERC-721 for all our memberships, from our community value alignment (ALANA Manifest) to dedicated role memberships, products such as the ALANAmagazine, and more to come.
As you may remember, the first standard officially proposed and implemented in the Ethereum ecosystem is the ERC-20 standard. It is the most commonly used token standard for fungible tokens, such as cryptocurrencies.
In ALANA, we use cryptocurrencies to pay writers for ALANAmagazine, and in the not-so-distant future, we will have even our own $ALANA token, which will be distributed to contributors to provide weight to their votes.
The ERC-1155 standard emerged when game developers such as Enjin entered the Ethereum space. They soon realized that the ERC-20 was fantastic for gold, points, and in-game currencies. The ERC-721 solved gear like swords, skins, and active memberships, but games need more than a few unique items. They needed hundreds, or even thousands, of them to run smoothly and keep their users engaged. Enjin published a first draft of this standard on the Ethereum GitHub in 2018 because it needed a contract type that could manage multiple token types simultaneously. Think of it as a contract, not just managing one item, but instead a whole wardrobe of items, like the Balenciaga shirt, the haute couture piece, and more, all at the same time. This is how the ERC-1155 was born.
While we’re not currently using the ERC‑1155 standard, we did experiment with it in ALANA’s early days by "attaching" fabrics and textures to ERC‑721 artistic NFTs, so others could remix them into their own artworks. It was a playful, almost gimmicky experiment in shared materials.
Well, there always is, isn't it? There are many more standards in the Ethereum ecosystem today, solving a wide variety of problems. If you are interested in doing some of your own research on tokens you might find interesting, here is a brief list:
ERC‑777: A “next‑gen” fungible token that keeps ERC‑20’s basics but adds smarter hooks for richer interactions and safer transfers.
ERC‑4626: A standard for yield‑bearing “vault” tokens that represent shares in DeFi strategies, so deposits and returns are easier to integrate.
ERC‑2981: An NFT royalties standard that lets creators publish royalty info in a consistent way for marketplaces to read.
ERC‑165: A small but important standard that lets contracts declare which interfaces they support (like “I’m ERC‑721” or “I’m ERC‑1155”).
BEP‑20 / BEP‑721 (BNB Chain): Close cousins of ERC‑20 and ERC‑721 on another EVM‑compatible chain, useful if you ever explore beyond mainnet and Layer 2's (L2's).
Soulbound / non‑transferable token patterns: Tokens that are bound to a wallet and can’t be sold, often used for reputation, credentials, or non‑tradable membership.
You see, this article could go on forever, but let's cut it here, and hopefully next time you run into something that starts with "token" or "ERC" (Ethereum Request for Comments), you will roughly know what you are dealing with. If not, join our ALANA Telegram channel and ask away.
Have a great week, ALANA adventurers!
Stella Achenbach
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