What Exactly Is a Token? The Currency of AI Explained

Tokens are the atomic unit of value in the AI economy. One token equals approximately 0.75 words (or ~4 characters). “The quick brown fox jumps” = 5 tokens.

What Is a Token

Like HTTP requests enabled web commerce, tokens enable AI commerce. Pricing is measured in dollars per million tokens. Understanding tokens is essential for understanding AI economics—they are how AI is priced, measured, and monetized.


This is part of a comprehensive analysis on AI economics. Read the full analysis on The Business Engineer.

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