Tokens are arguably one of the most powerful tools in the blockchain right now. A token can be a representation of anything on-chain — be it voting weight, shares in the company, or virtual assets (aka NFTs). A smart contract stores who has what token and how much of it. It also takes care of the business logic of transfers, trades, loans, etc. Tokens are nothing but a mapping of what token belongs to what address (or account) inside the smart contract. So, when you transfer your token to someone else, that mapping changes so that the traded token maps to the receiver’s address.