If you are new to the world of cryptocurrency, then you will have come across terms like cryptocurrency coins and cryptocurrency tokens. Wrapping your head around all of these terms can be quite frustrating. Both of the keywords are commonly used to describe the value of blockchain units but there are distinct differences too.
When the term token coin is used, it generally refers to a digital currency that can be used to make digital payments. A single coin operates within its own blockchain without needing assistance from other platforms. Coins can store a variable amount of value and can be used to pay for services just like how real money transactions work.
Any token coin cryptocurrency is identified with its distinct name. Bitcoin (BTC) is the most common cryptocurrency in the world but there are countless more currencies as well. Other coins are often called altcoins simply because they serve as alternatives to BTC. Thanks to BTC being an open-source protocol, it led to the birth of hundreds of these alternative coins. There are newer cryptocurrencies that do not use the BTC open-source protocol as well with some of the most popular examples being Ripple and Ethereum.
Crypto tokens are used to represent tradeable and fungible digital assets. Tokens are not limited to digital currencies alone. They can denote voting rights, commodities or any tangible or intangible product.
Tokens can also be used as mediums of exchange. The amount of functionality on offer with tokens is much higher than that coins have to offer. Tokens also enable holders to take part in various types of activity. There have been instances of tokens being used for betting purposes as well.
The most distinct differentiating factor when it comes to coins vs. tokens cryptocurrency is that tokens can be categorized under coins but not vice-versa since they do not always denote monetary value. Another differentiating factor is that tokes need to be hosted on third-party platforms like Ethereum.
For example, you can use a token bet on future events and depending on the outcome. There are decentralized prediction markets available online where you can take part in such transactions. Tokens are distributed via a company’s Initial Coin Offering stages. ICOs are often initiated via crowdfunding. The most popular platform for token development is currently Ethereum. Other popular platforms include EOS, TRX, and OMG.
There are currently more coins than tokens in the market but the balance is shifting heavily in favor of tokens and will continue to do so in the years to come. Whether you are investing in tokens or coins, you need to have the right understanding of how these digital assets work and how you can secure them.
The best thing you can do to protect your investment is going for hardware cryptocurrency wallets. These wallets are completely decentralized and cannot be hacked into unless you give someone explicit permission. If you want to invest in a hardware wallet for your coins and wallets, try out ELLIPAL’s offerings today!