Token
TechnicalWhat It Means
A token is the smallest piece of text that AI language models can understand and work with, similar to how computers break down images into pixels. When you input text into an AI system, it automatically splits your words and sentences into these tokens before processing them. Think of tokens as the 'currency' that AI models use to read, understand, and generate text.
Why Chief AI Officers Care
Token limits directly impact your AI costs and capabilities, as most AI services charge per token processed and have maximum token limits per conversation or task. Understanding tokens is crucial for budgeting AI initiatives, optimizing system performance, and ensuring your AI applications can handle the complexity of your business documents and conversations without hitting unexpected limits.
Real-World Example
When a customer service AI processes a support ticket containing 'Hello, I'm having trouble with my account login', this gets broken down into roughly 12 tokens. If your AI service charges $0.002 per 1,000 tokens and processes 10,000 similar tickets monthly, you can predict costs and ensure your token limits accommodate peak support volumes.
Common Confusion
Many executives assume one token equals one word, but tokens can be partial words, whole words, or punctuation marks depending on the language and context. A single sentence might contain anywhere from 15-25 tokens, not just the number of words you count.
Industry-Specific Applications
See how this term applies to healthcare, finance, manufacturing, government, tech, and insurance.
Healthcare: In healthcare AI applications, tokens become critical for processing medical records, clinical notes, and patient commun...
Finance: In finance, tokens refer to digital assets or cryptocurrencies that represent value or rights on a blockchain, such as u...
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Technical Definitions
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