Difference Between Token and Coin
If you are a cryptocurrency enthusiast, you must have come across the words “coin” and “token”. Unfortunately, these words are often considered “cryptocurrencies” and used interchangeably even by those who claim to be long-yeared crypto users. This misnomer is oftentimes misleading to users, especially beginners, who might want to purchase coins and find themselves grappling with tokens. Although both can represent a store of value and serve as medium of exchange, there are a range of worthy-of-note differences existing between them.
Everything You Need to Know About Coins
A coin, including altcoins or “alternative cryptocoins”, is the digital equivalent of money. More elaborately, it’s a form of digital money, created through encryption techniques, that stores value over time.
Bitcoin is the first and most popular coin. Bitcoin, like most coins, runs on the blockchain — a public and distributed ledger that records the exchange of information across a network of personal computers. In other words, data is stored collectively and shared between users of the blockchain network. This makes it decentralized and therefore there’s no single point of failure, hence making the network resistant to outside manipulations, hacks and scams. Which, in turn, guarantees full-fledged reliability and full validity of transactions.
While there are coins based on Bitcoin’s original protocol built by Satoshi Nakamoto (eg. Litecoin and Namecoin), there are also coins that run on blockchain made specifically for them (eg. Ripple and Monero).
As stated above, coins are similar to real money. They’re acceptable, divisible, durable, portable, fungible and have limited supply. It runs on a public-oriented blockchain where anyone anywhere in the world with internet access is allowed to join and can be traded and mined. Most crypto enthusiasts have predicted that coins will replace conventional forms of money in the coming years. Coins are not meant to perform duties beyond acting as money.
Everything You Need to Know About Tokens
Having discussed what a coin is and how it runs on the blockchain network, let’s delve into what a token is and why it’s different from a coin.
A token is a digital asset issued by a specific blockchain-based project to be used as a method of payment inside its ecosystem. Although it has similar characteristics with a coin, a token gives its holder an uncontestable right to participate in the ecosystem. It may perform the same functions as a digital and represent a company’s share and many more. Its functional duties are still unraveling with the launching of new platforms within its stable.
Let’s take a look at a concert ticket — a “real-life token” that can only be used at a specific place at a certain time. You can’t go to the restaurant and settle your bills with the ticket. Its value exists only in the concert hall. This is similar to digital tokens because their use cases exist only in a specific project.
Tokens can represent an asset or utility, and this use case gives rise to two types of tokens namely — security and utility tokens. Whereas security tokens (DAO’s recently hacked token) are created to represent the company’s share, utility tokens are designed to serve certain use cases in the project (BON Token, CrossFi Token).
It’s much easier to create a token when compared to creating a coin. Because you don’t need to create a new code or modify an already existing one. All you need is a standard template from popular platforms like Ethereum that runs on blockchain and allows anyone to design a token with proper guidelines. Using an existing template to create tokens provides smooth interoperability, which enables participants to store different types of tokens in one wallet.
CrossFi is a cross-chain protocol that provides liquidity to you for Filecoin staking and rewards.
CrossFi Official Website: https://crossfimain.com
CrossFi DApp Address: dapp.crossfimain.com
CrossFi Official Twitter Account: https://twitter.com/globalcrossfi
CrossFi Official Discord Group: https://discord.gg/UKGSX3VBY3
CrossFi Official Global Telegram Group: https://t.me/crossfimain_en
