Token School 1. — Difference between coins and tokens
The main difference between altcoins and tokens is in their structure…
It is important to note that all coins or tokens are regarded as cryptocurrencies, even if most of the coins do not function as a currency or medium of exchange. But there are some differences between coins and tokens.
Altcoins
Alternative cryptocurrency coins are also called altcoins or “coins”. Altcoins simply refer to coins that are an alternative to Bitcoin.
The majority of altcoins are a variant (fork) of Bitcoin, built using Bitcoin’s open-sourced, original protocol with changes to its underlying codes, therefore conceiving an entirely new coin with a different set of features.
There are other altcoins that were not built on Bitcoin’s open-source protocol. Rather, they have created their own Blockchain and protocol that support their native currency.
What is common to all altcoins is that they all possess their own independent blockchain, where transactions relating to their native coins occur in.
Tokens
Tokens are a representation of a particular asset or utility, that usually resides on top of another blockchain. Tokens can represent basically any assets that are changeable and tradeable, from commodities to loyalty points to even other cryptocurrencies!
Creating tokens is a much easier process than creating coins as you do not have to modify the codes from a particular protocol or create a blockchain from scratch. All you have to do is follow a standard template on the blockchain — such as on the Ethereum or Waves platform — that allows you to create your own tokens. Creation of your own tokens is made possible through the use of smart contracts; programmable computer codes that are self-executing and do not need any third-parties to operate.
Tokens are created and distributed to the public through an Initial Coin Offering (ICO)
The main difference between altcoins and tokens is in their structure; altcoins are separate currencies with their own separate blockchain while tokens operate on top of a blockchain that facilitates the creation of decentralized applications (DAPPs).
