There is lot of confusion about the various types of crypto terms being used by the people in cryptocurrency world. People often ask that what is the difference between a crypto coin and token? It is generally understood that crypto coins and crypto tokens are similar but you will be surprised to know that both coins and tokens are entirely different.
In this article we will explain-what is the difference between a Crypto Coin and Token ?
Cryptocurrency is a digital or virtual currency that uses cryptography for security. It operates independently of a central bank. Cryptocurrency can be either a coin or a token.
A crypto coin, also known as a cryptocurrency coin or simply a coin, is a standalone currency that can be sent and received by individuals. Bitcoin, for example, is a crypto coin. It has its own blockchain and can be used to purchase goods and services or traded for other currencies, both digital and traditional.
A crypto token, on the other hand, is a digital asset that represents a specific value or utility. Tokens are built on top of existing blockchain platforms, such as Ethereum. They do not have their own blockchain, but rather exist as a smart contract on a blockchain. Tokens can represent a variety of assets, such as stocks, commodities, or other digital assets.
One key difference between coins and tokens is their functionality. Coins are primarily used as a means of exchange, while tokens are used to represent a specific asset or utility. Tokens can also be used for fundraising, through an initial coin offering (ICO).
Another difference is that coins typically have their own blockchain, while tokens exist on an existing blockchain. This means that coins have their own set of rules and protocols, while tokens must adhere to the rules and protocols of the blockchain they are built on.
In summary, crypto coins are standalone currencies, while crypto tokens are digital assets that represent a specific value or utility. While both can be traded and used as a means of exchange, tokens have additional functionality and exist on top of existing blockchain platforms.
FAQs
1. Is Bitcoin a coin or a token?
Crypto coins usually have their own blockchain, whereas tokens do not have their native blockchain. Since Bitcoin (BTC) operates on its own blockchain, it is a coin. Tether (USDT) can be an example of a token since it runs on the Ethereum blockchain
2. Is a token better than a coin?
Tokens do offer more applications than coins. However, both solve different purposes. Moreover, crypto coins are evolving to provide features similar to tokens.
Hence, we can’t say that tokens are better than coins.
3. Can a token become a coin?
Yes. A token can become a coin when the project develops its own blockchain network. Successful migrations include Binance Coin (BNB), Zilliqa (ZIL), and Tron (TRX), which previously existed as tokens on the Ethereum blockchain.
4. Is Ethereum a coin or a token?
Crypto coins usually have their independent blockchain, whereas tokens do not have their native blockchain. Since Ethereum (ETH) operates on its own blockchain, it is a coin. Tether (USDT) can be an example of a token since it runs on the Ethereum blockchain
5. What is the future of cryptocurrency in India?
Read the following article to know about the future of cryptocurrency in India
Also Read :
Should RBI regulate cryptocurrency in India ? (indiatimes.com)
