Coin, Token and Cryptocurrency. WTF these means? and what is the difference between them?

As the web is moving towards Decentralisation, there is huge Hype about Cryptocurrencies.

We have come across terms such as Coin, Token, Cryptocurrency, ICO, etc., in our recent times as Blockchain tend to outreach many people and the developer community. Many of us have not completely understood these terms or are confused about the difference between them. So here’s my 2 cents about trying to show some light about the same.

What are Cryptocurrencies?

According to Wikipedia, A cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.

So let us establish that cryptocurrency is not necessarily associated with Blockchain instead It has existed prior to the existence of Bitcoin, and Bitcoin is the first cryptocurrency to use the decentralized Blockchain network to implement the digital currency.

Coins Vs Tokens

In short, All coins are tokens but all tokens are not coins.

Since Bitcoin was the first cryptocurrency to come into the Blockchain space, it is termed as a Coin and other coins are generally called as Altcoins(Alternative cryptocurrencies). An Altcoin is either variation of Bitcoin or has its own blockchain governing it. In the Bitcoin blockchain, Altcoins are formed by a Fork (Stay tuned for an Article about Forks.).

Ethereum is another popular Cryptocurrency running on the Blockchain. The advantage of the Ethereum platform and other similar platforms over bitcoin is, the Bitcoin platform which is purely for cryptocurrency whereas the ethereum platform enables us to write our own code over the Blockchain giving us the ability to create DApps(Decentralised Applications). This ability of the Ethereum enables us to create Tokens, Tokens are the representation of particular assets or utility or a cryptocurrency residing over another blockchain such as ethereum.

Conclusion

Coins and Altcoins are separate cryptocurrencies with there own Blockchain while tokens operate over another blockchain that facilitates the creation of DApps(Decentralised Applications).

Originally published at blog.upendramanve.com on October 13, 2018.