Coins vs Tokens: Know The Difference Crypto Basics
Any person who has set foot te the cryptosphere, even if for a day, voorwaarde have come across certain terms like coin, tokens, crypto coin, cryptocurrency, altcoins etc.
Wij take a glance and stir on to more complicated information. But do wij actually know what thesis terms mean? Are they the same or do they wield different meanings? Is a coin the same spil a token? Are thesis terms synonymous?
Well, they are not, but are often used te this way which is inaccurate. But then again, who is to be blamed for the inaccurate information? Nobody actually, for it is a very fresh field and often different terms are taken for granted and used inaccurately because wij are still learning about it.
And ter this learning curve, wij often miss the skinny lines that actually makes terms like coin and token different.
That is why, I thought of an article to highlight the differences inbetween a coin and a token ter the cryptosphere.
What Is A Coin?
A coin like Bitcoin, made by making variations te the original Bitcoin’s code like Litecoin, Namecoin etc. can be termed coins. Thesis are also referred to spil ‘altcoins‘ because they are an alternative to Bitcoin with an aim to have usecase similar to Bitcoin.
Therefore, the properties of such coins is also similar to Bitcoin:
- Fungible: One unit is omschrijving to another
- Divisible: Can be divided into smaller units of value
- Acceptable: Widely accepted spil medium of exchange
- Limited Supply: Supply is capped and onveranderlijk (compromised ter some coins)
- Uniform: All versions of the same denomination have the same value
- Portable: Can be carried along and exchanged
- Durable: Can be used a number of times without degrading
Also, there are some cryptocurrencies like Monero (XMR) that were not created on Bitcoin’s code base but are also referred spil coins because they have their own blockchain and also exhibit the above-mentioned properties.
Thesis coins are also sometimes referred to spil cryptocoins or cryptocurrencies but when you fundamentally know the concept of tokens you will understand that not all the coins listed on CoinMarketCap are actually coins.
To make it simpler, cryptocurrency can be considered spil the parent category. Under that, you have coins/altcoins/cryptcoins spil one sub-category and tokens spil another sub-category.
However, blockchains such spil Ethereum, Ripple, Next etc should also fall under the category of coins because they exhibit some properties of currencies but at the same time do not function solely for the usecase of money. That is why it becomes debatable and confusing. But ter this article, I will keep it plain and keep them te the category of coins because they have their own blockchain with a mixed usecase of acting like money and other utilities.
On the other palm, it is fairly effortless to distinguish tokens from coins or cryptocoins.
What Is A Token?
A token is a kleuter of cryptocurrency (without a currency usecase), that is usually issued on top of another blockchain. Generally, ter any usecase, tokens represent utility or an asset, or sometimes both.
For example, consider Golem project which has GNT tokens. Golem or GNT tokens are hosted on Ethereum’s blockchain and Ether (ETH) is the primary currency (or fuel) for the entire Ethereum blockchain.
Also, if you want to use Golem DApp, GNT tokens are a must-have because without those tokens one will not be able to use the Golem DApp.
So you see, a token is a secondary asset for a particular application on a blockchain ecosystem which also has a market value but isn’t a currency spil straightforward spil Bitcoin or Litecoin.
Also, coins like Ethereum that can exist independently, but tokens like GNT can’t exist without the Ethereum infrastructure.
Another example you can take is of CIVIC tokens that also reside on top of Ethereum blockchain. I think thesis two examples will help you differentiate despite the blurriness of the differentiating line.
The differentiators inbetween coins and tokens are becoming more sophisticated with the launch of niche crypto projects like Walton or Vechain.
However, the positive here is countries like Japan and US are formulating regulations around different types of cryptocurrencies which should make the picture clearer for us to differentiate inbetween various crypto projects.
That’s all from our side te this article. Wij would love to hear your thoughts on coins vs. tokens. Feel free to express your views te the comments section below.
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