1. Fungible Tokens.

Let's start by understanding the differences between coins and tokens.

Contrary to popular belief both coins and tokens are not actually stored in your "wallet".

In the case of coins, your balance is represented by the sum of all transactions sent to and from your wallet.

In the case of tokens, your balance is represented by an integer stored in an array ( balance sheet ) in a smart contract.

What is a token?

We have "the token smart contract" which in most cases has the following properties:

- name

- symbol ( the 3 letter ticker you find on exchanges )

- decimals ( usually 18 decimal places )

- total supply ( current supply that might or might not change depending on the contract's code )

- balance sheet ( in most cases starts with 1 entry representing the total supply )

At the same time it has the following interfaces:

- allowance ( allow the transfer of X tokens from my balance to Y's balance if they ask for it )

- transfer ( transfer X amount of tokens from my balance to Y's address balance )

Example balance sheet:

0x000001 = 300

0x000002 = 300

0x000003 = 500

From a purely technological point of view, there is no actual **need** for the "transfer" interface that allows external balance transfers to occur.

The application could be handling the transfers itself without allowing exchanges to list said "token".

Take a look at your reddit points balance, your activity points on bitcointalk, in essence they represent the same thing but they're non transferrable. They could be.

Your WoW gold or Eve Online ISK, same thing, yet none of these are transferrable outside their own application.

2. Non Fungible tokens.

Best known example of such a token can be seen in the crypto kitties implementation.

Here we have an asset, item, object, call it whatever you please, that is not interchangeable with another one.

Each one of these tokens is a unique entry in a registry and has it's own properties attached to them.

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