The accelerated development of blockchain technology has attracted many curious investors globally in recent years. Nevertheless, most of these investors aren’t knowledgeable of the new terminologies used with this relatively new technology. In particular, some aren’t aware of whether they’re investing in tokens or coins.
Cryptocurrency is a relatively newer sector that entails many terms that refer to digital assets, and many investors usually use them reciprocally. For instance, many investors perceive crypto tokens and coins as the same. However, one should note that the two aren’t the same. As indicated by industry gurus, all crypto coins are perceived as tokens, but not all tokens are coins.
Both coins and tokens delineate a store of value, similar to fiat currency, including euros, pounds, dollars, etc. Nevertheless, there’s a fundamental distinction between the two terms: digital coins are a type of money, whereas digital tokens delineate something assignable to a price.
Also, both coins and tokens appear on a blockchain, a secure record of online-based transactions – a ledger that any permitted individual can access. For instance, the Ethereum blockchain is a digitized record of Ether coin transactions.
Usually, the blockchain keeps track of Ether coins, or Ether-based tokens, as they’re transferred from one individual to the other. Often, people and enterprises keep their crypto coins in password-secured digital wallets.
The Internet and Blockchains
The Internet facilitated blockchain technology. Rather than being physically present, the blockchain is available on the Internet’s extensive network of inter-linked clients and servers. That means there isn’t a need for guards, armored vehicles, and vaults to transfer digital crypto coins around. Also, no government entity or enterprise controls the blockchain. Rather, it’s the supply and demand of a cryptocurrency that determines the price of a coin, such as Monero prices.
Nowadays, Bitcoin is accepted as a payment type by many big enterprises and is also the official currency in El Salvador. As Bitcoin becomes acceptable by more enterprises, investors purchase and store these and other digital crypto coins in their wallets in anticipation of better value.
What is A Crypto Token?
According to blockchain experts, tokens are available in a digital record on a blockchain network. However, tokens can’t be considered to be money since money is usually understood. Rather, tokens represent things.
Usually, a digital token delineates an intellectual or physical property, including a piece of artwork, music record, or a book. A well-known example of a digital token is the non-fungible token (NFT). An NFT is comparable to a digital collectible. An investor can purchase, trade, own, or sell it when appropriate. If the token delineates something of significance to many individuals, its value will rise.
What is A Crypto Coin?
Today, new crypto coins are emerging regularly, including Cardano, Dogecoin, Tether, and Litecoin. Irrespective of the name, the purpose of these coins is the same. They delineate a store of value and serve as a medium of exchange.
Similarly, new and varying forms of tokens are emerging. However, their purpose differs. For instance, the owner of a transactional token can utilize it in transferring money to evade steep bank charges. Also, a governance token permits an individual to cast a vote as a citizen, shareholder, or board member.