Crypto token vs Coins — What is the Difference between Crypto Token and Coin?
Blockchain is the complex and distributed ledger technology that gave birth to crypto tokens and cryptocurrencies. Not only this but also offered many business opportunities for crypto startups and speculators. Crypto coins and crypto tokens are not new terms in the blockchain world. Most blockchain enthusiasts were aware of these terms. But the problem is most people get confused about these two terms. Understanding the difference between crypto tokens and coins might be a tedious task in the context of cryptocurrencies for beginners. These two terms are often used interchangeably, but they refer to different concepts in the crypto ecosystem.
Cryptocurrencies and crypto tokens are becoming hot talks in the blockchain town. Many investors, traders, and startups invest their hard-earned money in different crypto coins and tokens to make profits. Some startups invested their money in crypto token development for making huge profits and boosting their brand value. Also, for creating a cryptocurrency. Both crypto tokens and crypto coins made a huge impact in the global marketplace.
Currently, people are more confused about these two terms: crypto ‘token’ and ‘Coin’. In recent years, the difference between crypto token vs coin has become a trending discussion in the cryptocurrency community. Some traders use the term crypto “token” to refer to and some call crypto “coins”. while some people use both terms to refer to all cryptocurrencies available on the trading market. Both crypto tokens and coins are different in many aspects. You need to know the difference between crypto tokens vs coins before starting a crypto business.
This comprehensive article will answer the question: what is the difference between crypto tokens and coins? Besides, you will also know its uses and other essential factors.
Let us begin this informative comparison article with…
What is a Crypto Coin?
The crypto coin is a digital currency that is completely created using the independent blockchain network. The first-ever crypto coin is bitcoin which is a popular crypto coin in the crypto ecosystem. The bitcoin is generated in a separate or a native blockchain and the price of this coin is high when compared to other crypto coins in the global marketplace. Similarly, crypto coins like Ethereum, ripple, and Litecoins also operate with their respective blockchain networks. All these crypto coins will differ in size, functions, rules, performance, mines, and more. Other than these, there are some prominent crypto coins such as dogecoin, EOS, Dash, Bitcoin Cash, NEO, Monero, Tron, Cardano, etc.
The crypto coins can be traded in the crypto exchange platform and utilized as a store of value. Crypto coin is issued directly by the blockchain protocol and used for paying transaction fees. In many cases, crypto coins are not only used to pay transaction fees but are also used to keep the crypto network secure. The crypto coins can be exchanged for a fiat currency without experiencing significant losses in terms of purchasing power. Crypto coins have some ideal characteristics such as
- It is decentralized and relies on code to manage transactions and security.
- Crypto coins are built on a native blockchain which allows users to enforce the rules of the ecosystem in an automated and trustless fashion.
- Crypto coin uses cryptography to secure the cryptos underlying network structure and system.
How is Crypto Coins used?
In general, crypto coins are designed and developed to serve the same purpose as traditional money. In the crypto industry, crypto coins are used for the transfer of payments, trading, promoting the brand, and fundraising. Crypto coins store value directly to their demand and supply. Therefore, the value of crypto coins will always be volatile. There are some exceptions to this. For example, Dash will allow the user to vote on decisions proposed to the DASH blockchain network. When it comes to bitcoin, the only way to get more Bitcoin is to buy the coin from the crypto exchange, you can accept Bitcoin as payment, or you can mine them. Crypto coins can be used as transfer money, as a store of value, and as a unit of account.
Now, let us see…
What is a Crypto Token?
Crypto tokens are also known as a digital token which represents the units of value, security, or any fiat currency value. One can create a crypto token on top of existing blockchain networks. The crypto tokens often share compatibility with the cryptos of that network and they are completely different digital asset classes. As previously said, crypto coins are developed on a separate blockchain protocol. Whereas crypto tokens are created on top of the existing blockchains.
In general, crypto tokens have some different characteristics such as programmable, permissionless, trustless, and transparent. As crypto tokens are programmable, they can run on software protocols. They are composed of smart contracts that outline the functions of the crypto token and the network rules of engagement. Crypto tokens are permissionless so that anyone can participate in the system without any credentials. Besides, no one can control the system because it runs on the predefined rules by the network protocol. Crypto tokens have high transparency and their transactions are viewable & verifiable.
Like a crypto coin, the crypto token can hold value and be exchanged. They are completely designed to represent physical assets, traditional digital assets, certain utility, or services. For example, some crypto tokens represent tangible assets. Such as real estate and art. Also, intangible assets like data storage space. The crypto tokens are also used as a governance mechanism for voting on particular factors. Such as protocol upgrades and other decisions. The crypto-token development process to serve these different functions is called tokenization.
How Crypto Tokens are Used in Real-Time?
Like crypto coins, the crypto tokens can also transfer value. However, crypto tokens have some additional benefits than being a medium of payment. Anyone can create their own crypto token on top of the existing blockchain by hiring experienced blockchain developers from the reputed crypto token development company in the industry. Crypto tokens are used for various purposes like trading, payments, raising funds for projects, boosting brand value, and more. In the crypto sector, different types of crypto tokens exist for various purposes. Such as
- Security tokens — this type of token works as proof of investment in real-world assets. such as equities and fixed income. The security tokens are issued only in the Security Token Offering (STO) platform.
- Utility tokens — these tokens provide access to a specific service or product. For example, the WRX token can be accessed on the Wazirx exchange platform.
- Asset tokens — This kind of token is linked to real-world assets. Such as real estate, gold, silver, bonds, etc. so these tokens represent the real-world investment.
- Stablecoins — These tokens will have a fixed value and they are pegged with fiat currencies like USD or EUR.
- Non-fungible tokens — This token represents unique items or collectibles, which could be real or virtual. The items can be digital art, tweets, image, painting, etc.
Blockchains Used For Creating a Crypto Token
As per today’s crypto market, three different blockchain platforms are used for the crypto token development process. Such as Ethereum, Tron, and Binance smart chain. The Ethereum is an open-source blockchain platform and has a native token named ether (ETH). Currently, there are also many tokens newly launched using the Ethereum blockchain platform. Some of the popular crypto tokens created using the Ethereum network are DAI, LINK, COMP, CryptoKitties, and more. These crypto tokens can serve multiple functions on the platforms. Besides, the ethereum-based tokens can also participate in decentralized finance (DeFi) mechanisms, accessing specific services, and even used for playing games.
When it comes to Ethereum, there are different types of token standards for developing crypto tokens. Such as ERC20, ERC721, ERC223, ERC1400, ERC1155, ERC888, and more. Among these standards, the most widely used token standards are ERC-20 and ERC721. ERC20 token standard allows the creation of tokens and smart contracts that can interoperate within the Ethereum ecosystem of decentralized apps. Whereas ERC721 is a non-fungible token standard that is unique and non-interchangeable with other similar tokens. As of now, there are several ERC20 standard tokens and thousands of ERC721 tokens in the marketplace.
Secondly, the Tron is also an open-source blockchain platform that helps in the crypto token creation process. Like Ethereum, the Tron also has different types of token standards such as TRC10, TRC20, and TRC721. Among these standards, TRC20 and TRC721 token standards are the prominent token standards for developing tokens. You can use TRC20 for creating utility tokens or security tokens. TRC721 is an NFT token standard, so you can create a non-fungible token by this standard. When it comes to Binance smart chain, BEP20 and BEP721 are the two token standards that can be used for the crypto token development process. Cclone@2020
Crypto Token vs Coin — What is the Difference?
Let us learn the differences between crypto tokens and coins. There are not many differences between a crypto token and a coin. The main difference between a crypto coin and the token is, the coin is created on a native blockchain platform whereas the crypto token is developed only on existing blockchain like ethereum, Tron, and binance smart chains. Besides, there are also some other differences between crypto tokens and coins you must know.
The crypto tokens are a store of value and a crypto coin does not have any physical existence during a transaction. All the transactions of crypto coins are made in a digital medium. One can store crypto coins for a long time but when it comes to value, it fluctuates every time. But the crypto token has a different story. The crypto tokens are attached to any other blockchain platform because they do not have a separate blockchain. For doing this, the token creator or issuer should be paying a fee to the respective blockchain ecosystem. For example, if a crypto token is connected to the Tron blockchain. Then the token issuer must pay the Tron fee to hold on to that blockchain network. Similar works for NEO, Ethereum, Binance smart chain, or DASH.
In this modern world, anyone can create their own crypto token by using the existing blockchain. For example, a person can develop a crypto token and link it with the Tron blockchain using the TRC20 standard and hence called the TRC20 token. But in the case of the crypto coin, you need to develop a separate blockchain.
Crypto Token vs Coin — Final Thoughts
An easy way to understand the difference between crypto coins vs tokens is to find out whether it is a crypto coin or token. If it has a native blockchain platform behind the development process, then it is a crypto coin. If there is an existing blockchain behind the creation process, then it’s a crypto token. As of now, crypto tokens are popular in the marketplace, so it will be the right time for starting a crypto token business. If you are a startup and want to start a crypto business, then you can launch a crypto token by using any of your desired blockchain platforms. All you need to do is hire a team of experienced blockchain developers from the leading crypto token development company in the industry. They will assist you in developing and deploying crypto-token in a blockchain network as per your business concepts at a reasonable cost.