Token vs Coin Explained.

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Hello friends, good to have you back here. I trust you're keeping well. Hope you got so much value from the the last topic we discussed, I mean Yeild Farming. Well I decided to peg it where we stopped, leaving you to do your homework on it.

So today I decided to discuss an interesting topic on Coin and Token. I felt I needed to distinguish this two confused terms which many of us have believed to mean the same up until this moment. Anyway I hope you find this write up interesting as I've prepared it solely for you.

Introduction

I've heard and seen people use the word coin and token interchangeably including myself and you know it blends into the discussion because we believe our thoughts is being grasped by our listener or audience as the case may be but in the real sense these two terms are distinct, they are not the same even though we use them interchangeably to communicate our ideas.

I know the question on your mind right now is... " What then is a coin and token?" Smiles... Well am gonna do justice to these two terms shortly. Just ensure you follow through till the end of this write up.

What is a Coin

A coin is a digital currency that has it distinct blockchain, I mean it own blockchain. To simplify it further, a coin is native to it blockchain and it is used for diverse purposes which includes storing of value, means of exchange and for carrying out all manner of financial transaction.

These coin are created either by means of mining on their native blockchain or generated by mean of staking. The consensus mechanism responsible for these are PoW and PoS respectively.
The mother coin, Bitcoin which is also abbreviated to be BTC is mined on the Bitcoin network using the PoW mechanism.

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So we can say that BTC is a coin because it has it blockchain. Same goes for ETH, it also a coin because it has it blockchain. The PoS mechanism is used to generate ETH. Validators works out the process on the Ethereum network while miners do the work in Bitcoin network.

It also important to mention that a typical coin has it use case, many of the coin we have today were created to solve a particular problem, although not all of them seem to do so, we have many alt coin (coins other than Bitcoin) today that seem to be lost in purpose yet thriving.

So if am to put this long talk on coin in a nutshell, I would say, coin are Cryptocurrencies that have independent blockchain, that is, it runs on it own blockchain. Another example of a Coin is Cardano (ADA)

What is a Token

A token is a digital asset like coin but then it doesn't run independently, it is powered by an existing blockchain and it is created to function is diverse ways. What am saying in other words is that a token is another type of digital asset that is not native to a blockchain rather it is built on an existing blockchain.

So many cryptocurrency are found here. Many of them are powered by popular blockchain network like Bitcoin and Ethereum. A striking difference between a coin and token is that token are not really used as a medium of exchange.

While coin seem to function like a typical traditional currency, a token function more like assets and could represent a valuable digital product like NFT's or even objects. They could represent deeds as well. The reason why we do not see the striking different between a token and coin is that both can be bought, sold or traded in an open market.

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If am to break the difference down in a way you will understand better, I would say coin functions just like Naira and Kobo (Nigerian currency) or Dollar and cent (U.S currency) while token function as voucher or coupons.

Example of token includes File coin (FIL), Cronos (CRO) Axie infinity; a very popular digital game that made many rich overnight..smiles.
It's important to mention that Tokens are not mined but created by developers to function majorly within some Dapps or blockchain project. Infact most of these tokens run efficient with the aid of smart Contracts.

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Conclusion

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There you go friends.I would love to wrap it up at this juncture. I want to believe you've gotten so much from this piece. As my usual custom is, I would always encourage that you DYOR to be sure of every financial step you would want to take as I won't be liable for any form of loss encountered by you.

Feel free to share with me your thoughts in the comment section. Thanks for your time once again. Gracias!

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^{Disclaimer: This post is made as an education and not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your own research and consult a financial advisor.}

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Regards
@lhorgic♥️

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