Token money is an unbacked currency that exceeds the value of the material of which it is made. Such money is often minted to facilitate small transactions and is usually found in coinage.
A surprising description of token coinage can be found in the writings of Ludwig von Mises, who comments on the issuing of this currency and its effect on economy. He writes:
“According to this section, the total value of the silver coins minted was never to exceed twenty marks per head of the population, nor that of the nickel and copper coins two and a half marks per head. In the opinion of the legislature, these sums represented the demand for small coins, and there was consequently no danger that the total issue of token coinage would exceed public demand for it.” (Ludwig von Mises, The Theory of Money and Credit, Pacific Publishing Studio, Lexington, Kentucky, 2011, p.16.)