Coins vs Tokens: Understanding the Difference

Cryptocurrencies can be confusing to grasp, both conceptually and in practice, because the Blockchain technology, which is the foundation of cryptocurrency, uses a lot of computing terminology and language. Many people are interested in crypto and want to begin their portfolio. This can be a huge obstacle. This article will explain key terms and processes in cryptocurrency.


What is Cryptocurrency?

Srurtosurrensu is a currency like USD or other surrensiedz, but it’s designed for online transactions to be extremely safe using cryptography. To secure and verify transactions, cryptography employs encryption techniques. Bitcoin was created in 2009. It is the first cryptocurrency to be decentralized. Satoshi Nakamoto created it as a digital currency or cryptocurrency that could be used to send payments via a communication channel, without the need for a third-party. Bitcoin relies on a ledger called Blockchain Technology, which records all transactions and verifies them chronologically.

Bitcoin was not the first cryptocurrency. Bitcoin, however, is the very first currency of this kind. Its creation was a landmark in the digital age because it is distributed and decentralized. The cryptocurrency market has seen significant growth since its creation in 2009, with Bitcoin. There are now over 600 coins and tokens which can be considered cryptocurrencies. Most of these coins and tokens do not meet the “currency” definition.

Coins vs. Tokens

It is essential that you understand that coins and tokens can be considered cryptocurrencies. The truth is, most coins don’t function as currency or a medium of exchange. In fact, they are cryptocurrency that are treated as commodities, because they aren’t used as currencies. It is incorrect to call cryptocurrencies “cryptocurrencies” – they are “crypto,” but not “currencies.” Technically, currency is a form of accounting and value storage. It also serves as a means of exchange. Bitcoin has all these features. The creation of Bitcoin, as I have already stated above, has sparked the entire crypto-space. Bitcoin is also the most dominant cryptocurrency ever since it was created. This makes all coins that were conceived following Bitcoin a cryptocurrency even though they do not meet the above characteristics.

Coinmarketcap categorizes the cryptocurrency into two categories:

  • Altcoins are alternative cryptocurrency coins
  • Tokens


Altcoins are coins which can be used as an alternative to Bitcoin. The majority of these coins are based on the bitcoin source code but with some tweaking to add different features. Altcoins include Litecoin and Dogecoin.

Other Altcoins aren’t derivated from Bitcoin’s protocol. These include Ethereum, Ripple Nxt Omni Waves Counterparty. They have their own Blockchains and protocols that support their native currencies.

Namecoin is the first Altcoin. It was created in April 2011. Namecoin acts as both a cryptocurrency and a domain name registry that’s not controlled by any group, government or individual. Namecoin, which was launched in April 2011, is a cryptocurrency.

All Altcoins share the same trait. They each have their own blockchain, or sidechain where they store their transactions.


A token is a crypto currency that needs another platform in order to operate. Tokens are anything programmed as a smart contract in the blockchain. This includes commodities, loyalty points, and even other cryptocurrency!

It is easier to create tokens than a coin because you can use an existing template. This means you don’t have to modify codes or start a blockchain. You can create tokens by following a template that is available on the Ethereum blockchain. This is because of its amazing and unique blockchain technology. Smart contracts are computer code that is registered in a blockchain and allows you to create your own tokens.

Many tokens are built upon the Ethereum platform, such as Augur, Status TenX, Kyber Network OmiseGo and Golem. Other platforms are available to build tokens on, such as Counterparty, Bitshares Qtum Nxt Omni NEO Ubiq Burst Ubiq, NEO and Qtum.

Different types of tokens are available:

  • Useful tokens
  • Asset tokens
  • The equity token is a way to show your appreciation for the value of your home.
  • Reputation Tokens and Rewards

The public can purchase tokens in an Initial Coin Offer (ICO), a type of crowdfunding that involves selling them to finance a particular project. ICOs are similar to Initial Public Offerings (IPO) of stocks. However, buyers receive nothing but digital tokens. They do not get ownership of the company, nor any promises, or any participation.

Fact : The market capitalization of coins and tokens is between 300 billion and 400 milliards USD.

The conclusion of the article is:

Tokens and coins differ in that tokens exist only on a specific platform, while coins can be run on any platform.

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