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 economicsβ€”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.

Scroll to Top
FourWeekMBA