Dear friends, many people are still confused in two terms called Coins and Tokens especially who have recently put their toes in this crypto world. So, I would like to cover these two terms with the relevant information by using less confused words. After reading this article, I hope you would easily understand the difference between the two and make others aware of it.
Let’s start with this screenshot of CoinMarketCap.Com
In this picture, a drop-down menu shows an option to search for cryptocurrencies by clicking on ‘Coins Only’ or ‘Tokens Only’. You can find a list of coins and tokens separately by using these options.
But now the question is how the Coins are different from Token? Why are they used separately? To find those answers we need to understand the basics of these terms. Let’s start understanding it one by one and I am sure you would do this very easily.
What are Coins?
Digital Coins are the assets that have their independent blockchain. Coins only operate and function on their own blockchain technology. The few examples of coins are as below:
• Bitcoin
• Etherium
• Litecoin
• Stellar
The coins work on different platforms or blockchain. They have their different purposes and of-course different management.
What are Tokens?
People often call Tokens as Coins but it is incorrect. The term Token is far different from coins.
Tokens are created on an existing blockchain. The most commonly used token platform is Ethereum. Many tokens are based on Ethereum. However, there are other token platforms also are being used such as NEO, Waves, and Lisk etc. The few examples of tokens are as below:
• Ontology
• ICON
• Binance Coin
• Zilliqa
The Tokens save not only the time and resources which is required in creating new blockchain but also it uses the other features of blockchain such as security and scalability etc. Interestingly, anyone can create his own tokens but he needs to spend some coins of that specific blockchain. For instance, if you want to create tokens on Ethereum platform then you have to spend some ETH in creating the Tokens. Moreover, there is no requirement to find miners to complete the transactions which are required in the case of Coins.
Conclusion
I hope you are now able to distinguish between the two terms. So, before buying any Token, you can check the platform on which that token is based on. This can be done by reading the whitepaper of that project that is mostly available on the official website of that project.
Cheers and Steemit!!!
Regards,
Danny Crypto
@text2crypto