Know What’s the Difference Between Coins and Crypto Tokens?

Difference between Coins and Crypto Tokens | In the world of cryptocurrencies, the terms coins and tokens are often encountered. However, it is often for investors who are still vacillating between crypto coins and tokens. Are you one of them?

For the first time entering the world of cryptocurrency, quite a lot of people are confused by the many assets in this investment, including the terms coins and tokens which are often used interchangeably.

Although in fact, at first glance it looks the same, both coins and tokens have the most prominent differences. The dissimilarity of these 2 assets is not just in name. However, their roles, sources and uses are different.

Well, for those who are still worried about the differences between coins and crypto tokens, you should watch the explanation of the differences between coins and tokens in the crypto world.

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Crypto Coin

In the world of cryptocurrencies, cryptocurrencies are found digital assets that have their own blockchain. In other words, the blockchain searches for all business transactions involving the native cryptocurrency.

Blockchain is a large digital dictionary of technology, where the technology is made into a digital storage. The term blockchain is also related to several new terms the same in cryptocurrency or like bitcoin. Because, bitcoin as a type of currency from crypto and several other currencies in this technology.

Simply put, these assets are cryptocurrencies that are created using cryptography so that they can be stored for a long period of time on the blockchain that contains them. In blockchain, data is stored centrally and shared on their respective networks. The role of blockchain is to ensure transparency and reduce theft and fraud of digital assets.

Coins have similar characteristics to fiat currency, namely that they are interchangeable, shareable, acceptable, portable, last a long time, and have a limited stock.

For example, on the Ethereum blockchain, investors can use ether, the token of the Ethereum blockchain, for business transactions.

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Crypto Token

Unlike coins, crypto tokens are digital assets for decentralized programs (DApps) built on blockchain mechanisms. Tokens have a market value, but are not technically a currency.

The coin does not have its own blockchain, but works on the cryptocurrency blockchain. Even token business transactions are not handled by blockchain, but rely on smart contracts.

Tokens are created on various bases on a specific blockchain. When generating tokens, developers must adhere to certain token creation standards in order to use them on a custom blockchain.

Suppose, developers on Ethereum often stick to the ERC-20 standard so that their tokens can work with other decentralized programs on the Ethereum blockchain network.

In addition, there is the ERC-271 standard that developers generally adhere to to create non-fungible tokens (NFTs) as cryptographic assets that represent ownership.

Inequality of Coins and Crypto Tokens
To make it easier for you to understand the differences between coins and tokens called crypto assets, here are the differences between coins and Crypto tokens.

  • Coins are created from a dedicated blockchain network, and tokens come from a base of DApps built on top of a blockchain network.
  • Crypto coins work like fiat currencies, and tokens are generally digital assets issued by specific projects.
  • Tokens can be used for payment processing, and tokens can be used as a means of payment and in addition to enhancing digital agreements.
  • To create or increase distribution of tokens, a mining process is required, and to create or increase distribution of tokens, an Initial Coin Offering (ICO) process is required.

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The simplest difference between Coins and Crypto Tokens is the blockchain. Coins have their own blockchain, and tokens don’t have a blockchain because they “use free” the existing blockchain.

Because it is created on a blockchain called the digital currency side, you have to pay fees such as fees every time you do business with tokens, not just the first time you create a token.

Coins are only used for payments and investments. At the same time, crypto tokens can be used not only for payment instruments, but also for certain roles created by DApps creators.