BeginnerAI BasicsFundamentalsKnowledge

What Are Tokens and Why Should You Care?

Tokens are how AI reads text — roughly 1 token equals 3/4 of a word. AI tools charge per token and have token limits. Understanding tokens helps you stay within limits, reduce costs on paid APIs, and know why AI sometimes 'forgets' earlier parts of long conversations.

AI doesn't read words like we do. It breaks text into tokens — chunks that might be whole words, parts of words, or punctuation. 'ChatGPT' might be 2-3 tokens. This matters because: 1) You're charged per token on paid APIs, 2) There's a maximum tokens the AI can process at once, 3) Longer outputs cost more. Understanding tokens helps you use AI more efficiently.

**Key takeaway:** Tokens = AI's unit of text. More tokens = more cost.

tokensbasicscostsupervised-learning-in-60-seconds

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