Difference between coin, token, utility tokens, and security token

Difference between coin, token, utility tokens, and security token

By Dipendra | DIPENDRA RATHORE | 6 Sep 2020



I am glad that you are interested in this topic and want to know about this. You should be know because in which thing you are investing. You should know

One more thing that i am writing this post to crypto centric 

LET'S START

Coin and Token

 suppose you have an asset which was created from scratch ( building its own algorithm/ architecture/ mining/ etc ) like bitcoin is/in created on SHA-256 algorithm, and Ethereum 2.0 will be shift to PoS (proof of stake) etc are commonly known as coin. Because they have their own blockchain But if your asset is in built under any blockchain like BTT  was created in Tron network, Origin Protocol, LINK, ETC was created under Ethereum (ERC20) network are commonly known as TOKEN. And every ERC-20, TRC-10, TRC,20 OR many OTHERS BASED ON ANY BLOCKCHAIN CALLED TOKEN

Imagine MOSTLY coins have their own network of computers that are all working together to validate all operations, transfers, blocks creation … Those coins run on their own blockchain. Some of them, blockchains that have smart-contract feature, can issue tokens that will run on their network. Like DeFi TOKENS are based on Ethereum which use the ERC20 protocol, and as like BNB COIN has their own blockchain and on this blockchain based token called BEP2 TOKENS

TOKENS are easier to create than coins because infrastructure already exists, developers can focus on their own use case to develop new potential on operating networks.

 

Utility Token

When a new start-up or any new developments start they need fund to grow their start-up or development so they issue a digital token to fund their development or start-up later that digital token used for purchase some goods and services on these start-up and later these token can be swapped or exchanged to other token or CRYPTO CURRENCY or any other fiat currency via exchanges or wallet

Utility token are not mineable and are based on third-party blockchain. However, similarly to coins, utility tokens are valued only for its inherent functions and properties. And utility token value based on the function or property they represent and service they provide. For example, Basic Attention Token (BAT), based on Ethereum network,  ERC-20 standard-based token is used for the interactions with the Brave browser. ( IF YOU HAVEN'T DOWNLOAD BRAVE BROWSER DOWNLOAD NOW ) BAT tokens are used for ads block, specific changing type of viewed ads or to earn tokens for viewing ads it.

Own edit

Mostly utility Token are based on ERC-20 like GNT, SRN, BAT, CVC, etc.  and MANY other are based on other third party blockchain

Security token

These are pure fund safe investment tokens  we can say because security token have to pass howey test 

Security token drive their value from an external, tradable assets, real Estate, because the TOKENS are bound with provide their security  

security when there is an expectation of profit from the effort of others. If the ICO doesn’t follow certain rules and regulations, then they could be subject to penalties. So they have to follow otherwise project being stopped.

Conclusion

Every coin, utility token, security token, have their own pros, cons, advantage, etc so do. Before investment DYOR



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Dipendra
Dipendra

I am learning everything what make me good in health & wealth


DIPENDRA RATHORE
DIPENDRA RATHORE

I am learning reading writing crypto, market, For Hobby and wealth

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