S4B Crypto Contest - Season 11

entity01 (68)Nigeria | No Clubin Steem4Bloggers • 2 months ago

Greetings friend's

What's is the main difference between a crypto token and a crypto coin?

Namely, before understanding the nature of a certain token, one has to distinguish between crypto tokens and coins depending on their technology and utility.

Crypto Coin: This refers to a digital currency that operates on its own blockchain.

Mostly they are used as a medium of exchange and storage of value with their independent networks, not depending on other platforms.

Crypto Token: Another example is ethereum, where it can be found in already existing blockchain network. Tokens are created through smart contracts for purposes such as voting rights or ownership of physical assets among others; alternatively tokens could be used at ICOs or DeFis.

In conclusion coins have their own blockchain and are used as currency, while tokens are built on existing blockchains and serve various purposes beyond being a digital currency.

Can crypto tokens represent assets other than currencies?

Indeed, crypto tokens can be used to represent things other than money. Such tokens are called security tokens or asset-backed tokens. Assets that can be represented by security tokens include but not limited to real estate, company shares, goods such as works of art and luxurious drinks like wine. They also make trading of these assets on the blockchain more streamlined and safe when compared to traditional processes. This could change the way classical assets are purchased and sold forever.

Is Bitcoin considered a crypto coin or a crypto token?

Piaxabay

Bitcoin is also described as a crypto currency and a type of digital or virtual currency that includes security through cryptography. It could be classified as this sort of money since it is employed on its own public journal called the blockchain and is an excellent store and channel of exchange value.

Alternative crypto tokens, on the other hand, are cryptocurrencies that represent assets or utilities and are often issued across already existing blockchain platforms such as Ethereum.

Are crypto tokens more volatile than crypto coins?

Piaxabay

Generally speaking, crypto coins are not as volatile as crypto tokens. Projects issue these tokens to raise funds and they often have a specific utility within the project's ecosystem. Since their value depends on the success of the project and how fast it is being adopted, they are prone to more market fluctuations as well as any news or development related to them.

However, Bitcoin and Ethereum which are some of the leading cryptocurrencies have larger market capitalizations hence less volatility compared to small tokens. But it’s important to note that cryptocurrencies in general are known for being volatile which means both coins and tokens can undergo significant price changes.

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