Coin Vs Token: What Are The Basic Differences?
Cryptocurrencies are well identified as virtual currency or digital money that is secured with the help of cryptography. It makes use of advanced encryption techniques to verify and secure all transactions. Bitcoin is recognized as the first decentralized digital currency, and it is powered by a public ledger that helps to maintain all transaction-related records. This ledger is named as Blockchain.
Cryptocurrencies are divided into two categories: Alternative cryptocurrency coins or simply Altcoins and Tokens. Those who are interested to collect details about both these terms are advised to go through the details below:
Coin is a specific type of cryptocurrency that operates independently; one of the best examples is bitcoin. Coins have their own platform, and that is named blockchain. Note that there is no major difference between coin and crypto coin; the first one is just an abbreviation for the second. Also, altcoins are the coins that are available in the market as an alternative to bitcoin. Most of the altcoins are simply the variants of bitcoin; they are created using the open sourced platform of bitcoin by making few basic changes in the code so that they can have a separate identity. Some of the most commonly used altcoins are auroracoin, dogecoin, Litecoin, peercoin, and namecoin. Many other altcoins are not derived from Bitcoin; rather they have their own blockchain network with a different protocol that supports the native currency for them. The list of such coins includes Counterparty, Waves, Nxt, Omni, Ripple, and Ethereum.
Tokens make use of other platforms to work in the market. Tokens provide a method to define the protocol, and at the same time, they fund the operating expenses that are essential for hosting any service. Ethereum, as well as Bitcoin, have millions of servers around the world where they run their network. They take help from built-in mechanisms to distribute the token on various computers connected to the network. Tokens also provide a simplified model for developing shared computing resources such as file storage, compute and databases. They make sure that system can work as a decentralized mechanism without taking help from any organization. Blockchain technology supports decentralized networks that help to manage shared data with ease. A token can be a digital asset, a currency that is used to make a payment between different parties can be a medium for accounting or a way of preventing attacks.