Cryptocurrencies and Cryptokens

There’s still a lot of confusion on what are cryptocurrencies and what are cryptokens(cryptocurrency tokens).

Cryptocurrencies are coins with monetary value that fuels the operations of a network.

Think of it like this, for a car to work, it requires energy from a source like gas. A car will only work if you put gas in it, otherwise its main function as a transportation vehicle becomes useless. Bitcoins have real-world value and its considered a cryptocurrency because it fuels the network operations. Miners only process transactions because they receive bitcoins in reward and it has real-world value. Ethereum fuels its smart contract environment. Its blockchains’ main function is to create smart contracts.

Cryptokens represent an asset. It has been used as a securities token to fund projects and startups. Cryptokens can be compared to a stock that represents part of ownership of a company. They operate on a blockchain that is fueled by a cryptocurrency. Ethereum and Waves platforms are blockchains that allow you to create cryptokens using smart contracts where you define the quantity and operations such as send, create and destroy cryptokens. There have been many controversies because the SEC (securities and exchange commission) says cryptokens aren’t following protocol and securities laws.

In conclusion, cryptocurrencies and cryptokens are quite different in what they represent and are used for. Their similarities are that they are operated and created in a blockchain environment.