What are alternate coins and tokens?
People often misplace the terms blockchain and cryptocurrency. The obvious reason would be that — blockchain technology is implemented mainly in cryptocurrency field. Since bitcoin was the project which came up with the blockchain way to decentralize the transaction details in a public network, it is obvious that it’s preferred implementation would be in the currency field.
We need to first understand the very basic definition of cryptocurrency to dive into coins and tokens. Cryptocurrency is a digital currency but functions using the blockchain protocol which is backed by cryptography. Hence, the name cryptocurrency. It is only the cryptography which makes the transaction completely decentralized.
We all know that bitcoin is not the only cryptocurrency which is gaining attention in the crypto market, although it was the first. All these other cryptocurrencies are kick-started by Bitcoin’s development either directly or indirectly. These currencies are now known as alt currencies. These can be either coins or tokens.
These alternate cryptocurrency coins are termed as altcoins. Major altcoins are forked versions of Bitcoin opensource project with minor changes or additional features. Litecoin would be a very good example of such an altcoin. And there are other coins which are implemented completely different than Bitcoin with additional functionalities. Etherium, Ripple and many other. They have their own protocol with a different ecosystem.
NOTE: Not to confuse the fork term with Bitcoin hard/soft fork where the Bitcoin blockchain is forked instead of just the protocol.
Tokens, on the other hand, are assets or utility built on top of the same blockchain. The only difference is that it doesn’t have a fixed value like a coin. Tokens can basically represent any asset from any tradable goods to equity. Tokens are also widely distributed during crowdfunding through an offering known as ICO (Initial Coin Offering) to fund the project.
To conclude the difference, altcoins have a dedicated blockchain to conduct the transactions and they could be directly traded with any existing coins. Whereas, tokens are built on top of this existing technology.