Token VS Coin Difference in Cryptocurrency
Today, we will be talking about an interesting topic called TOKEN and COIN. What is the different between Coin and Token?. If you want to know there are still many who still confuse distinguishing between TOKEN and COIN. Are you aware?. Sometimes when we already have crypto, we think we already know all about the world of cryptocurrency. When you buy crypto, you will definitely put it in a crypto wallet, right?. Then hopefully, can get rich only by owning crypto!.
If you want to know, Coin and Token have different concepts. Many out there are still confused, even if you are a crypto user or owner of cryptocurrency asset.
What does Coin mean?. Coins refer to cryptocurrencies built on their independent blockchain network. The most famous example is Bitcoin (BTC), while is also the world's largest cryptocurrency by market capitalization. Bitcoin is powered by its native blockchain network.
Similarly, Litecoin (LTC), and Ethereum (ETH), Dogecoin and many more which function on their respective blockchain. Don't forget, DDKOIN (DDK) is also a Coin, because it also has its own blockchain.
How are digital Coins used?
Digital coins are designed to serve the same purpose as physical coins. In the crypto ecosystem, digital coins enable the transfer of payments. Digital coin also store value directly linked to their demand and supply. Therefore, the value of digital coins is often volatile.
What is a Token?
Token refer to cryptocurrencies that don't have a blockchain network of their own. Instead, there cryptocurrencies built on another blockchain. Users can create digital tokens using one of the many platforms in the DeFi (Decentralized Finance) ecosystem.
Do you know?. Ethereum is one of the most popular choices, thanks to its support for smart contracts. Most of digital tokens found today are ERC-20 since the Ethereum platform easily enables creating tokens on top the Ethereum blockchain.
Do you know that once DDK Core 2.1 is ready?. DDKoin will also allows user to create a token on top of DDK'S blockchain. Currently, thousands of tokens exist in the market.
How are digital Tokens used?
Much like digital coins, tokens also enable the transfer of value. However, in most cases, a digital token does have some additional functionalities and depending on the type of project being undertaken. Anyone can create digital tokens to fulfill specific functionalities.
For instance, BAT token (Basic Attention Token) is used as a reward each user who browser their web. User get paid in BAT when they view advertisements from publishers who have partnered with the Brave browser.
Do you know?. There is different types of digital tokens exist for various purposes.
The first is the Security Token
Work as proof of investment in real world such as equities and fixed income. These are issued during Security Token Offering (STO).
The second is Utility Token
Utility tokens are designed to provide access to a particular service or product. For example, the Fil Token can access the Filecoin platform.
The Third is Asset Token
It's a digital tokens linked to real world assets such as real estate, gold, etc. In this case, a token represents the real-world investment.
The fourth is Payment Token
Payment tokens are almost similar to digital coins since they enable a transfer of payment in return for goods and services.
The fifth is Stablecoin
Stablecoins are digital tokens that have a fixed value. These are often pegged against Fiat currencies like USD or EUR.
The sixth is a Non-Fungible Token (NFT)
This tokens represent unique items, which could be real or virtual. Items used within a game are an example of these tokens.
Token VS Coin Difference in Cryptocurrency
That's the explanation a little bit about Digital Token and Digital Coin. Now, let's recap what are the main differences of Digital Coin and Digital Token.
- The first is digital coins have their blockchain network, but tokens are built upon an existing blockchain.
- The second is digital coins can be used for processing payment, but tokens are suitable for multiple needs.
- The third is digital coins are more difficult to create, while tokens easier to develop because that can be built based on existing blockchain like Ethereum.
If you are already in the world of cryptocurrency, surely you know all kinds of challenges in the cryptocurrency market, right?. If you understand the basic differences between the various types of cryptocurrency available. Risk can be reduced and you can make better decisions in the ecosystem.
Whatever it is, do your own research and due diligence in whatever you want to get involved. Hopefully, the information and education about cryptocurrencies and fintech in this article is useful.
Reference: https://youtu.be/MnfjYqgloDg
Post a Comment for "Token VS Coin Difference in Cryptocurrency"