When ever we search any post in Cryptocurrency or bitcoin tags, surely we found a post that is related to token distribution. But many of us dont know what is token. As it is trending, they just buy tokens.
Hello steemians, i'm rks2562 and today i will describe what is token and what is coin, in very easy language to understand.
First of all, You have to note down that coins or tokens both are Cryptocurrencies, even most of the coins do not function as a currency or medium of any exchange.
- EASY DEFINITION OF CRYPTO CURRENCY:
The term cryptocurrecy contains two word CRYPTO+CURRENCY. We all know what is currency. But what about crypto? its sounding very fancy is not it? Now my friends the crypto comes from cryptography principle whis is use to generate crypto currency and transfer ect. cryptoghrapy is nothing but a branch of computer science which deals passwords, secret, safety , encyption,generation distribution, transfering ect.In easiest words cryptocurrencies are digital, decentralised currencies which is generated by crytographic science thats it.
- COIN VS TOKEN: CLASSIFICATON OF CRYPTOCURRENCY:
The term cryptocurrenency is a misnomer, As a currency represents
- a unit of account
- a store of a value
- a medium of exchange.
All these characteristics are fullfilled by BITCOIN(BTC) and scince the cryptocurrency field was blasted by BTC's creation. Any other coins appeared globaly after bitcoin also considered as crypto though they not fullfill the above characteristics of an actual or real currency. As of today there are 1375 cryptocurrencies according to the data available on https://coinmarketcap.com/ website as well.
- COMMON TYpES OF CRYPTOCURRENCIES:
- ALTCOINS OR ALTERNATIVE CRYPTOCURRENCY COINS
- TOKENS.
- ALTERNATIVE COIN:
Alternative coins are aslo known as altcoins or coin. It often has the interchangibility. Altcoin nothing but the alternative to Bitcoin. Many of altcoins are varient of altcoin or fork of Bitcoin. They built using Bitcoin's open sourced, changes with original protocol and hiding the codes, introduced as entirely new coin with their different features. some examples of altcoin which are built by using Bitcoin codes Namecoin, Peercoin, Litecoin, Dogecoin & Auroracoin. The first altcoin was Namecoin, which was introduced globaly in april, 2011.
There are other altcoins but not built by using Bitcoin codes, rather than they create their own blockchain and protocal too which support their currency or native currency. Some examples of this kind altcoins are Ethereum, Ripple, Counterparty, Omni , Nxt.
The common thing or similarities of these altcoins are they posses their own blockchain and Transaction are made in their own native currencies. So we can say they are independent.
- TOKEN:
Tokens are not like altcoin, they dont have their own platform they required other platform to exist and operate. Creating tokens is a pretty easier process as you do not have to modify the codes from a particular server or create a blockchain of own. Just they have to follow a platform on the blockchain – such like Ethereum or omni platform – which allows to create their own tokens.
Tokens provide is not the way to define a protocol but to fund the operating expenses required to host it as a service. Ethereum or bitcoin has more over 10 thousends of servers all over the world or minners that runs their network. They cover the hosting value and providede tokens to the minners as reward.
It is just like, when we are child and do some work for our grand father and get toffees as reward, nothing else.
Tokens provide a model for creating share resources while keeping full control over sources in decentralised manner.
Blockchain technology is that which allows to keeping full control over sources in decentralised manner.
- ICO:
Tokens are created and distributed to the public through an Initial Coin Offering (ICO), which means crowdfunding, through the release of a new cryptocurrency or token to fund project development. It is pretty similar to Initial Public Offering (IPO) for stocks. We are crazy over ICOs as they represent a great way of identifying interesting projects. The value and quantity of tokens released can be static or calculated depends on the amount of total funds raised.
- SUMMARY
So, what are the main differences between coins and tokens ?? yes!! in their structure.
altcoins have their won Blockchain and Transaction are made in their own native currencies. So we can say they are independent.
Tokens are not like altcoin, they dont have their own platform they required other platform to exist and operate. So they are not independent. Tokens operate on top of a blockchain that facilitates the creation of decentralised applications.
THANK YOU,
RAKESH DAS
@rks2562
