Crypto Tokens: Understanding and Differences with Coins

Crypto tokens are one of the cryptocurrency assets that you can rely on to make a profit. It can also make it easier for you to do certain activities. You may still be confused about what is the difference between crypto tokens and cryptocurrency coins.

Here we will discuss crypto tokens, the difference between tokens and coins, and examples of crypto tokens that you can find on the crypto market.

What are Crypto Tokens?

Crypto tokens are assets built by decentralized applications on a pre-existing blockchain. This means that tokens are assets that are present on someone else's blockchain.

Even though its arrival is slower than coins, the presence of tokens is proof that blockchain technology opens opportunities for anyone to create their own digital assets to achieve the desired benefits.

In order to create tokens, the developer has to pay using crypto coins on the chosen blockchain developer.

Tokens can also be assets that represent a certain utility. That makes it usable as a means of payment on projects related to it.

What are Crypto Coins?

Crypto coins are digital assets that exist on the blockchain that forms them. Also known as digital currency that can be stored for a long time on a blockchain.

The characteristics of coins are the same as money that we usually have, which can be used as a means of payment, stored, and used as a profitable asset. Coins represent a wide variety of things that a holder can own.

Crypto money can also be mined, so it can change its status to the property of those who mine. However, to mine it takes time and qualified tools.

The difference between Crypto Tokens and Crypto Coins

To be able to know the difference between crypto coins and tokens, below is an explanation for you.

#1. Differences in blockchain ownership

Tokens exist on a pre-existing blockchain or belong to someone else. To be stored on the blockchain, the token developer must first make a payment.

Meanwhile coins are created by blockchain developers, so they have their own protocol. Coins do not need to make payments to exist on the blockchain.

#2. Differences in use

In general, tokens are used not only as payment instruments, but also as keys for certain access. An easy example that you can find is Musicoin which is used to access listening to songs on the Musicoin platform.

While coins are usually used for various kinds of transactions or payments that are possible for it. For example, buying a Tesla car using Bitcoin.

#3. Differences in manufacture

To be able to own a token, an Initial Coin Offering or an offer to the public must be carried out directly through certain cryptocurrency applications.

Meanwhile, the number of coins is generally set at the beginning. Making or distributing it itself can be done by mining or mining. To do this you need certain tools and time until the coins are found.

What are the Types of Crypto Tokens?

There are many examples of crypto tokens that are present on various blockchains. Below are the types of crypto tokens you can find on various blockchains.

1. NFTs

Is a type of token that represents the ownership of works that can be digitized from pictures, photos, music, antiques and others. Has a unique certificate that makes it not easy to duplicate.

2. Stablecoins

Is a type of token whose value is based on fiat money, so the fluctuation is not so high, aka stable. An example is a token that follows the value of the US Dollar.

3. Asset tokens

Is a type of token whose value is based on assets commonly used as a medium of exchange. An example is gold.

4. Utility tokens

Is a type of token that can be used as access for certain utilities on certain projects. For example Musicoin which can be used for music streaming services on Musicoin.

5. Security tokens

The type of token that can be used to represent the shares of a company that uses a blockchain system. An example is the securities of OldFi or Old Financial System.