Cryptocurrency has taken the world by storm, and everyone is interested in investing and understanding the working of the crypto world. If you know anything about cryptocurrencies or are aware of the community, then you must’ve heard the term “Coin” and “Token” tossed around a lot. Although they sound very similar, both of these terms have different meanings that you must know.
As the cryptocurrency community is changing rapidly, you need to be aware of the differences between terms. Coins and tokens are two different kinds of units that are mostly created using cryptography. So if you are interested in understanding the differences between the two, you are at the right place. Here are the major distinction between a coin and a token
Coins, which are also called alternative cryptocurrencies or altcoins, are essentially digital money. Coins are created using various encryption techniques storing values as time goes on. The most famous example of coin is Bitcoin, the biggest cryptocurrency as of today. Coins are basically money but in a digital form.
Most of the characteristics that define coins align with how money works in the real world. They are fungible, acceptable, divisible, portable, durable, and don’t have an unlimited supply, just like any currency. Most valid coins are based on blockchain, which is a public and distributed digital ledger that allows for transactions while keeping the risk of fraud to a minimum.
Coins are generally tied to publicly open blockchain. This allows anyone to join in and be a part of the network. Coins can be sent, received, and even mined. Coins are meant to perform as a digital currency and nothing more. The trend has been hyped so much that people are even considering that they will replace conventional money in the near future.
Tokens, on the other hand, have a little more to them than just being a digital version of conventional money.
Contrary to coins being a form of money that can be used anywhere, tokens are digital assets that are issued by a certain project. The tokens can be used to pay for services and goods inside that specific project’s ecosystem. Although that may seem similar to coin, it also gives the holder of tokens a right to participate in the network.
Tokens have more functionalities. Apart from functioning as a digital asset, they can also represent a share of the company or give access to a project’s functionality and much more. Consider a currency inside a video game. Many video games have their inbuilt currency that can be used to buy things inside the game. However, you can't use that money to pay for food or anything in real life for that matter. Similarly, tokens can be used in certain environments and also for certain things that the project allows.
Launching a token is much easier than launching a coin. If you understood the core differences between the two, then we’ve done our job. There are many tokens present online for purchase and exchange like Dog Show, Shiba Inu and Baby Doge. It is suggested that you should follow Dog Show closely; as it is the next big thing in the market.