A bearer token is a type of security that grants access or ownership to whoever holds it. In the context of transactions, it operates similarly to cash; whoever possesses the token can use it without needing to verify their identity.

In blockchain systems, bearer tokens are often used for authentication and authorization. They are generated during communication between clients and servers, allowing users to perform operations without repeatedly inputting credentials. This reduces friction and enhances user experience. Bearer tokens can be particularly useful for decentralized applications, as they facilitate peer-to-peer interactions without needing a trusted central authority.

However, security is a concern; if a bearer token is compromised, anyone who gets hold of it can access the associated resources. To maintain safety, it’s crucial to implement measures like token expiration, secure storage, and encryption. Overall, bearer tokens provide a straightforward way to manage access and ownership in various applications.