In cryptocurrency, in terms of encryption, a “token” or “cryptocurrency token” is tokenized data relating to transactions that can be sent across the internet and stored (for example on a blockchain) without jeopardizing sensitive data.
The idea being that each token is unique and corresponds to important data used to create a transaction (like a private key) but doesn’t contain that data specifically (so it can be shared publicly without jeopardizing the information). It is “a hash
of the transaction” (and thus is a unique code that relates back to a specific transaction without containing sensitive information about it).
This allows people to confirm ownership of Bitcoin on the public ledger (aka the blockchain; which is public record), without sharing sensitive information.
The result is that the Blockchain is full of tokens of this type sitting next to public transaction data. A token (of the encrypted type) identifies the transaction and is created by the
sender automatically, and the rest of the transaction data is recorded along with it.
In cryptocurrency, the “token” people are generally
referring to when they say “token,” is one described above PLUS
the concept of a currency token / value token.
In a way the term is being used loosely, as people aren’t saying
“oh look, I own a TXID.” They mean, I own the rights to the
Bitcoin as denoted on the ledger (as confirmed by my knowledge
of the private keys which provided the signature which created
the TXID, which relate back to the wallet address, which relates
back to transactions on the blockchain).
TIP: The TXID token isn’t the only token used in cryptocurrency. Each block contains a timestamp token for example. Meanwhile, a Bitcoin address can be described as “a
token.” Bitcoin is encrypted six ways from Sunday, lots of hashes are created, some hashes are also well described as tokens, and then on top of that Bitcoin is a token of value. Lots
of token going on, so people tend to refer to cryptocurrencies as tokens (thereby sort of giving the term an additional meaning in general in cryptocurrency).
TIP: As you can see above, when a transaction is sent some information is encrypted and other information isn’t. A token is sent along with public addresses and amounts
sent. The token is like a unique identifier for the transaction. To see a visual of this, see: blockexplorer.com/.