An asset is an object that represents value on the blockchain. These objects can be a variety of things, such as a digital asset like ada,
A token is a short term for “asset token”, which is the on-chain representation of an asset and its basic accounting unit. A token can represent one ada, one house, or the value of ten tonnes of coffee, for example.
Cardano supports multi asset, and this is very important when you compare it with other blockchain technologies like Ethereum,
first thing i want to do is explain how ethereum tokens work because as of now it is the most used platform for issuing crypto tokens
In ethereum the native token is Ether, a token within Ethereum, that is not Ether itself, is stored in a smart contract. Essentially, Ethereum tokens are smart contracts that make use of the Ethereum blockchain.
the way ethereum tokens are issued is like this: you’ve got the ethereum blockchain then through a custom coded smart contract you can issue a non-native token
this token won’t have all the advantages of ethereum and you have to pay for smart contract execution every time you move your token this is why people complain about ethereum fees being so high
it’s not very efficient and it leaves the door open for human error when coding smart contracts
A token in ethereum is a program (smart contract) to manage balances. It is literally a mapping of addresses to numbers storing the balance of each address. In essence and oversimplifiying, Tokens are value counters stored in a contract.
ERC20 is an Ethereum token standard, widely used for the purpose of token issuance on various platforms today.
Unlike ERC20 tokens, the tracking and accounting of native tokens is supported by the ledger natively (ERC20 tokens require smart contracts to achieve the same thing)
now with cardano when tokens are issued on the blockchain they don’t require smart contracts which means one no custom code which has its own cost because you need to code it but also no smart contract fees to talk to the blockchain
And that’s what Native means, that these tokens are supported by the Cardano accounting ledger without the need for additional smart contracts, as the ledger features built-in support to track ownership and transfer of more than one type of asset.
So in addition to lower cost tokens issued on cardano will receive the full benefits of the cardano blockchain such as the same level of safety and security as ada itself and eventually a governance system as it rolls out
and when it comes to making transactions you can send multiple tokens in a single transaction saving you on multiple transaction fees if you have to move multiple tokens to the same address
While both ada and native tokens hold value and act as a payment and transaction unit, only ada is used for fees and rewards, while only native tokens can be customly created.