What Are Coin And Token? How Are They Different?
What is Coin?
Coin (commonly known as Altcoin) is a digital currency created by the encryption technique that stores value over time.
The Coin is equivalent to currency, and Bitcoin is the best example. Bitcoin is based on public and distributed blockchain technology with a general ledger, on which all transactions are made public in a transparent manner. The data is stored jointly and shared among the participants on the Blockchain network.
Blockchain ensures transparency and minimizes fraud. Many other coins are also created based on the same protocol as Bitcoin, including Polkadot, Ethereum, and Blockchain-based coins.
Coins have similar characteristics to currencies: they can be classified, divisible, accepted, mobile, sustainable and have a finite supply. Most Crypto market participants think that the future Crypto will replace the currency.
Critical features of Coin:
- They are built on Blockchain with open source – anyone can participate in its network.
- They can be sent, received, and mined.
- The Coin has no function other than the currency function
What is a token?
Tokens are digital assets issued by the project, which can be used as a payment method inside the ecosystem of that project, performing the same functions as Coin. Still, the main difference is that it allows the holders of these Tokens to participate in the network.
It embodies the functionality of digital assets, represents the company’s capital, gives access to project functionality, and much more. For example, if you take a concert ticket, you can only go to the concert at certain specified places. You cannot take it to the circus or the comedy. The same tokens are most commonly used in a given project.
Tokens represent an asset type or a utility, so Security and Utility are two differentiated types of Tokens. Security Token is designed to share company assets (DAO is the same type, attacked immediately after release, it is a form of Security). At the same time, the Utility Token has some cases to use inside that project.
What is Utility Token?
Utility tokens are utility tokens. Utility tokens are born to serve a project with specific goals and features. For example, tokens for the Dock.io project have the payment and voting feature; BNB tokens of Binance have the quality of discounting transaction fees…
What is a Security Token
Security tokens, also known as securities tokens, are a form of electronic stock issued in the form of tokens. You will be entitled to a dividend based on the number of shares you own in that project. Security tokens also allow you the right to vote or participate in the decision of some project work.
Creating Tokens is easier than Coin because you don’t have to create new codes or modify existing ones – you can use a standard template from platforms like ETH, based on Blockchain, and let anyone create a new Token in just a few steps. Using the same venue to create tokens provides smooth interoperability so that users can store all different types of tokens in a standard wallet. ETH is the first platform to simplify the creation of Tokens.
Distinguish between Coin and Token
- The Coin is a virtual currency that works individually.
- A token is a virtual currency that must be based on the platform of another virtual money in order to work. For example, the Ethereum platform, NEO, and NXT can be used to build tokens.
In terms of features:
- Coins are created to be used as a currency, a value storage unit, and for trading.
- Tokens have a more extensive use (of course, they can also be used for payment). The token may be fuel for an active network (AS) or an exchange unit in an application (CMT).
- A coin type needs to be developed with its storage wallet, and the transaction fee will be deducted directly from that Coin.
- Tokens can be stored in the same wallet explicitly developed for the base platform. Transaction fees are payable according to the regulations of the parent platform (Ether or GAS).
Where to buy Tokens?
Tokens are coins issued from ICO installments, so you can buy directly from crowd-sale or public-sale installments of those ICO projects.
If the token has passed the public issuance, you must wait for the token to be listed on exchanges such as Binance, Kucoin, Bybit, etc., to buy.
In addition, some tokens will be decentralized exchanges such as Kyber Network, PancakeSwap, and UniSwap. You can buy tokens directly at these brokers and store them in your wallet.
In which wallet do you store your tokens?
To determine which wallet the token is stored in, you need to determine which blockchain platform it works on.
- Ethereum tokens: stored at Ethereum wallet such as TrustWallet, MetaMask,…
- ANCHOR’s token: stored at the NeoTracker wallet.
- Stellar tokens: stored at Stratis Wallet.
- Similar to other platforms such as Waves, QTUM, NEM…
The Coin is only a payment method, while Tokens can represent the company’s share of the capital, providing access to products or services with various functions. Coins are seen as currency, so you can use them to buy and sell things. You can purchase Tokens with Coin coins, but not the other way around. Coin operates independently, while Token has a specific use in the project ecosystem.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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