"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.
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.
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