Sirwin
Sirwin

Cryptocurrencies and tokens - They are not the same


"In a world as liquid as 'crypto', the borders between 'token' and cryptocurrency are very blurred. The 'token' can be considered as the basic brick behind all digital transactions, from the simplest to the most complex, while cryptocurrency is a 'token' specifically oriented to serve as a means of payment and store of value. . But in practice, there is no clear agreement and both concepts are often interchanged or confused" | Vanessa Pombo Nartallo, BBVA Creative

The biggest difference between a cryptocurrency and a token is that cryptocurrency is the intrinsic property of the blockchain, such as BTC, RBTC, or ETH, while tokens are built upon the existing blockchain using smart contracts. Cryptocurrencies are the native assets of a particular protocol on blockchains, while tokens are built on platforms built on those blockchains. The cryptocurrency industry has said the key difference between coins and tokens is that cryptocurrency coins are the native asset of a blockchain, such as Bitcoin or Ethereum, while cryptocurrency tokens are created by platforms and applications built on top of the existing blockchain.

Many tokens were created on top of an existing Blockchain that has its own Cryptocurrency, like Ethereum, which has the Ether cryptocurrency as its native Cryptocurrency. While Ether (ETH) is the native cryptocurrency of Ethereums blockchain, there are a number of other, various tokens which have also made use of the Ethereum Blockchain. Ethereum uses this coin as its Ethereum-native currency, but tokens like BAT (Basic Attention Token) and Loopre also exist within Ethereums blockchain.

Like cryptocurrency coins, cryptocurrency tokens are designed using blockchain technology; however, cryptocurrency tokens arenat native to a blockchain. This is a key characteristic that coins have, keeping their records tied to the blockchainas underlying infrastructure. Unlike coins, which represent the proposed medium of exchange directly, crypto tokens are the representation of the asset. Here, the key difference between coins and tokens is that coins are native to their blockchain, meaning that they were created during a given blockchains launch, for specific use within said blockchain.

70b24963e6be333bd132bc9554eec615fe5cab6530c80e64dd17c296b5be86bb.png

Tokens act much like cryptocurrency, meaning they are a kind of money that exists in the blockchain, and that you can move from account to account. When we are talking about cryptos and tokens, these are essentially subclasses of a digital asset, which utilizes cryptography and cryptographic techniques from the blockchain platform. Virtual tokens usually act as the unit of transactions in a blockchain, which are created using standard templates such as those on the Ethereum network, which allows the user to create tokens.

Crypto Tokens are the exclusive derivatives from the larger smart contract platforms such as Ethereum, which allows users to create, issue, and manage tokens which are derived from the main Blockchain. Developers can create cryptocurrency tokens for specific projects as smart contracts, and deploy them to existing blockchains.

While there are many other crypto tokens that were created using Ethereums Blockchain Network as well, such as LINK, COMP, Crypto Kitty, etc. each of these tokens may have different functions depending on which platform they were built to utilize smart contracts. Tokens have a long history, even before cryptocurrency came to be. As an investor, coins represent the technology blockchain is meant to solve, whereas tokens have different use cases which need to be studied separately. The differences between coins and tokens are not too much, but it is necessary to be aware that crypto coins and tokens are not one and the same.


Follow on Twitter!

@AmpleforthOrg @ButtonDeFi @Publish0x

Tools, Platforms & Applications:

CoinMarketCap TradingView | KuCoin | BingX | StormGain | CoinInn | CoinEX | MoonXBT | BiBox | QuantFury (Referral Code: JRRU2593)

Social Media Link:

Telegram Facebook Twitter | Medium | Reddit | Pinterest | Instagram | Torum

Other Articles:

Traders and holders, some things we should know | Cryptocurrencies: brief summary for new investors | Cryptocurrencies: The Dark Side | Is Bitcoin A Ponzi Scheme? | Bitcoin As A Store Of Value | Inflation: Understanding The Terms | Decentralized Finance (Defi), blockchain-based solutions | Why Do Governments Hate Cryptocurrencies? | A Real Solution Cryptocurrencies Against Economic Inflation | Centralized Exchanges Vs. Decentralized Exchanges | Some Of The Most Common Myths About Bitcoin  | Imagining A World Where Fiat Money Does Not Exist Cryptocurrencies Vs Fiat Money Why Everyone Should Learn Trading? A Path To Financial Freedom Trading: The Hardest Way To Make Easy Money? |  The Money Of The Future Are we running out of space? Psychological Cycle Of The Investor Let money work for you Commenting On Kucoin Emotions Versus Investment, The Great Psychological Dilemma Hero Or Villain Will artificial intelligences be the masters of the known world? Feed The Soul Before The Body Money Flow Theory ("True ignorance is not the absence of knowledge but the fact of refusing to acquire it" - Karl Popper) |  Artificial Intelligence Friend or Foe? Do the laws of robotics really protect us? Time: Your Best Asset The Cryptocurrency Trader Controls How He Trades, The Market Controls How And When The Cryptocurrency Trader Gets Paid What Does The Cryptocurrency Trader Need To Operate In The Markets? |  Haters & Cryptocurrencies |  How to achieve financial freedom when you are deeply in debt |  Just do Something  |  Commenting about Tradingview |  Estupidy Is Not Disability |  Crypto Addiction Cryptocurrency Market Makers Web3 Is About Free Choice And Democracy Cardano (Ada): The Voltaire Era Trade in cryptocurrencies, emotions, overcoming greed and the excess of confidence Danger: FUD & FOMO Do You Follow Your Dreams? NFTs - Fraud? Ponzi? Bubble? About Bitcoin Core About Pancakeswap Protect Your Cryptocurrencies About Uniswap The divinity of the cryptocurrency trader is within himself | Smart Contracts: Revolution or Evolution? 

REMEMBER THAT YOU ARE ALSO REWARDED FOR READING THE PUBLICATION, CLICK ON THE "☆ TIP" BUTTON AND RECEIVE YOUR REWARD. TIPS ARE FREE!
ec947975cf680e51e451a0a413d289b0e006746c352a9d41324a54cd261305ea.png

Author's Note: The opinion expressed here is not investment advice, it is provided for informational purposes only and reflects the opinion of the author only. I do not promote, endorse or recommend any particular investment. Investments may not be right for everyone. Every investment in the market and every trade you make involves risk, so you should always do your own research before making any decisions. I do not recommend investing money that you cannot afford to preside over as you could lose the entire amount invested.This is an informational article, I do not promote, endorse or recommend any particular investment, investments may not be suitable for everyone as the entire amount invested could be lost

 

How do you rate this article?

124


CryptoEntrepreneurs
CryptoEntrepreneurs Verified Member

Trader, entrepreneur, freelancer, enthusiast and promoter of globalization, adoption and understanding of cryptocurrencies and new information and communication technologies (ICTs)


A bit of everything ...
A bit of everything ...

“Everyone has their own forms of expression. I think we all have a lot to say, but finding ways to say it is more than half the battle." Criss Jami (existentialist philosopher, poet, essayist, musician, singer, designer and lyricist). | "Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth". Marcus Aurelius (Roman Emperor).

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.