There are various terms, which a person who has decided to sail in the vast ocean of Cryptocurrency, will come across. Among those terms, the Token is one term, which will definitely be a part of it.
Have you ever heard of the term Cryptocurrency Token? Are you aware of the difference between Cryptocurrency Coin and Token?
Let us guide you in detail, what’s the difference between the Cryptocurrency Coin and Token!
A Cryptocurrency Coin is just like something, which is based on the model and code of Bitcoin. The Coins like Litecoin, Ethereum etc are the Cryptocurrency coins, which are founded based on the code of Bitcoin and thus be regarded as the Cryptocurrency Coins, These Cryptocurrency Coins have their own Blockchain and exhibits several properties like Portability, Uniformity, Durability, Limited supply in most cases, acceptability as a medium of exchange, etc.
When we talk deeply, we will find out that Cryptocurrency is divided into Altcoins and Tokens. These Altcoins are all the Cryptocurrency coins that are alternative to Bitcoin. These Altcoins are either Bitcoin derived Blockchain (e.g. litecoin, dogecoin etc) or are native Blockchain (e.g. Ethereum, ripple etc). The Altcoins that are native Blockchain coins have their own Blockchain and protocol that offers the needed support to their currency. The examples as mentioned above are Ethereum, Ripple, NEO etc.
Cryptocurrency Token is an asset or any utility that resides on top of another Blockchain. The Cryptocurrency Token is a representation of an asset that is tradable, but in fact exists on others’ platform like Ethereum, or NEO. Created over the Initial Coin Offerings, the launch of the Crypto Tokens is much easier and during the initial stages is offered to the investors in lieu of small Cryptocurrency Coins through the ICO Offerings.
Below is the Token Creation Process:
Investors >>>>Smart Contract (in return, investors get tokens by investing some amount)>>>ICO Project
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Here’s the difference between Cryptocurrency Coins and Cryptocurrency Token:
The purpose of a Cryptocurrency Coin can is to serve as the coin. They act like money, while the Cryptocurrency Token cannot be regarded as the form of money, in the same way as the Cryptocurrency coins are.
– The Cryptocurrency Coins are hosted on their own platform (in most cases), while the Cryptocurrency Tokens are hosted on another Blockchain like Ethereum or Waves.
– The Cryptocurrency Coins are limited in functionality, while the Cryptocurrency Tokens are varied in functionality and have the caliber to deliver speculative returns to the investors.
– The Coins are based on their own platform, for example, the Bitcoin is based on Bitcoin Blockchain, while the Ethereum is based on the Ethereum Blockchain, while the NEO is based on the NEO Blockchain. But, the Cryptocurrency tokens are built and based on other’s platform; the most famous one is the Ethereum platform, which is ERC-20 platform.
– The Cryptocurrency Coins need miners to verify the purpose of the transaction and to carry out operations, while the Cryptocurrency tokens require no such miners to verification and transaction purpose.
In general cases, the line between Cryptocurrency Coins and Cryptocurrency tokens are not clear and most often the tokens are also regarded as the Cryptocurrency Coins. The clarity over the terms, coins, and tokens aren’t prevalent, and it may take some time when the people will get a clear insight what’s actually a Cryptocurrency Coin and what a token is!
The Cryptocurrency Coins are native to their own Blockchain, while the Cryptocurrency Tokens are based on the top of another Blockchain. Both serve different purposes and are varied in how the investors see them for investment or for any other purpose.