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What Is The Difference Between Cryptocurrency Tokens And Coins?

What Is The Difference Between Cryptocurrency Tokens And Coins?

Cryptocurrency is extremely popular today. Before we dig in deeper as to what cryptocurrency is all about, let us first define cryptocurrency. It pertains to a digital or virtual currency that is secured or encrypted using the cryptography technology. What is cryptography? It is the use of encryption method to secure and verify the transfer of transactions.

Looking back at the history of cryptocurrency, it is the bitcoin that first represent the decentralized cryptocurrency. It is run by a public ledger, BlockChain. It is the one that records and validates the transactions. There are other cryptocurrencies that existed prior to bitcoin, but it is the creation of bitcoin that paved a way to digital currency. It is the bitcoin technology that precipitated the expansion of a diverse ecosystem of coins and tokens. Coins and tokens are both cryptocurrencies.

Differentiating coins and token cryptocurrencies

Not all coins function as a currency or medium of exchange. However, they still belong to the cryptocurrency category. The same thing goes for innovation 100% backed tokens. If you are going to understand deeper the term cryptocurrency, you can conclude that it is actually a misnomer since it represents a unit of account. It is a medium of exchange and a store of value.

What about tokens? Do they still belong in the cryptocurrency category? The answer is yes. Bitcoin marked the cryptocurrency era, but anything that comes after it is still considered cryptocurrency. Tokens are one of them. In fact, tokens were tagged as the second most valuable cryptocurrency on the market. Unlike bitcoin, tokens are designed with their own programming language. Many regard token as an upgraded version of a bitcoin. Through tokens, people can write smart contracts without using an intermediary or paperwork.

Generally speaking, tokens are cryptocurrencies built on top of a BlockChain, which represent a digital asset that you can own and transfer to someone else. Do not be confused with tokens and bitcoins. They are actually the same entities belonging to cryptocurrency category. They represent a unit of account, but tokens are the most advanced form of bitcoin.

 

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