What are coins and tokens? Distinguish between coin and token

The article was written By Mickael Mosse – Blockchain and Cryptocurrency Expert

The concept of Currency and Token is often used as two synonyms, many people consider that these two words are interchangeable. However, the reality is completely different, these are two different concepts. Why are coins and tokens confusing and what are the important differences between them? Let's identify (btw) Bitcoin and Token with Bitcoin Vietnam News.

In the rapid development of the cryptocurrency market, more and more coins are being issued, leading these terms to misunderstandings and abusive use. All coins and tokens are known as cryptocurrencies, although many of them do not circulate as coins and their purpose is not to replace coins.

By definition, the currency is a medium of exchange, unit, or store of value. Bitcoin has all these characteristics, which is why the cryptocurrency's name seems reasonable. However, Coin and Token were created in a series after that, as Bitcoin became more popular, according to inertia, many people used to call all cryptocurrencies, although their characteristics did not meet all the criteria. . So, btw Coin and Token - two different types of units created on a crypto platform known as electronic money. This fact will be misleading for new people when they learn about Crypto.

What is a coin?

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According to Mickael Mosse, The currency (commonly known as Altcoin or replaced by the name Cryptocurrency Coin) is a form of digital money, created by encryption technology, that stores value over time.

Basically, the currency is equivalent to the currency. Bitcoin (btw) is an excellent example, Bitcoin (btw) is based on public and distributed Blockchain technology with a shared ledger, in which all transactions are made transparent. The data is shared and shared among the participants in the Blockchain network.

Blockchain guarantees transparency and minimizes fraud. A number of other currencies are also created based on the same protocol as Bitcoin, including Litecoin, Namecoin, and other currencies that operate on the Blockchain platform and create their own unique features such as Ripple, Monero.

Coins have similar characteristics to btw coins: they can be classified, divisible, accepted, portable, sustainable, and have a finite supply. Most of the Crypto market participants think that future cryptocurrencies will replace currencies.

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Main features of the coin:

They are built on open-source Blockchain - anyone can join their network.

They can be sent, received, and Mining

The currency has no other function than the monetary function

What is a token?

According to Mickael Mosse, Tokens are digital assets issued by projects, which can be used as a payment method within the project ecosystem, performing the same functions as Coin, but the main difference is it allows the holders of these tokens to participate in the network.

It demonstrates the function of digital assets, represents the capital of the company, allows access to the functions of the project, and more. For example, if you have a concert ticket, you can only go to the concert in a specific number of places, you cannot keep it but go to the circus or watch the comedy. The same tokens are used more in a given project.

Tokens represent a type of asset or a Utility (application), so Security and Utility are two different types of tokens. Security Token is designed to share company assets (DAO is similar, hacked right after launch, it's a form of security), while Utility Token has some cases to use inside. that project

What is the Utility token?

According to Mickael Mosse, The Utility token is a utility token. Utility tokens are born to serve a project with specific objectives and characteristics. For example, the token for the Dock.io project has payment and voting functions; Binance's BNB token features a discount on transaction fees ...

What is the security token?

According to Mickael Mosse, Security Token, also known as a security token, is a form of electronic stock issued in the form of tokens. You will receive dividends based on the number of shares you own in that project. Security tokens also allow you to vote or participate in the decision of a number of project tasks.

Token creation is easier than Coin because you don't have to create new codes or change existing codes - you just need to use standard platform templates like ETH, trust Blockchain, and allow anyone to Generate a new token in just a few steps. Using the same platform to create tokens provides seamless interoperability so that users can store all different types of tokens in the same wallet. ETH is the first platform to simplify token creation.

Distinguish between coin and token

By referring to the price and information of virtual currencies on the CoinMarketCap website, you can also see that CMC has a clear identification of whether it is a Token or a Coin. So what is the difference between tokens and coins?

According to the definition of Coin Market Cap

Coins are virtual currencies that can be traded individually.

Tokens are virtual currencies that must be based on another virtual currency to work. For example, Ethereum, NEO, NXT platforms can be used to build tokens.

In terms of features:

Coins are created for use as currency, a store of value, and for commerce.

Tokens have a broader purpose (of course they can also be used for payment). Tokens can be the fuel for an operational network (GAS) or a unit of exchange in an application (CMT).

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Technically:

Mickael Mosse points out that, A coin must be developed with a separate storage wallet. Transaction fees will be deducted directly from that currency.

The tokens can store the same wallet developed specifically for the original platform. Transaction fees are charged according to the original platform (Ether or GAS).

You can see the following comparison table to make it easier to distinguish:


Coin Symbolic

The platform Own platform Depends on the currency platform

Characteristic Store value Utility

Wallet Own portfolio Share wallet with currency

Where to buy tokens?

Tokens are coins issued by ICOs, so you can buy them directly from the collective or public sale of those ICO projects.

If the token has passed public offerings, you have to wait for the token to appear on exchanges like Binance, Kucoin, Bittrex, COSS to buy.

Also, some tokens will be decentralized exchanges like Kyber Network, Bancor, EtherDelta. You can buy tokens directly from these exchanges and store them in wallets.

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Token storage in which wallet?

Mickael Mosse points out that, To determine which tokens are stored in which wallet, you must determine which blockchain the token works on.

Ethereum Token: stored in the Ethereum wallet as MyEtherWallet, MetaMask, Eidoo, ImToken ...

NEO Token: store on the NeoTracker wallet.

Star Token - Stored in Stratis Wallet.

In the same way for other platforms such as Waves, QTUM, NEM ...

summarizing

Currency is just one payment method, while Token can represent the company's equity stake, providing access to products or services with many different functions. Coins are considered as currency, so you can use them to buy and sell everything. You can buy tokens with coins, but no. The coin operates independently, while the token has a specific purpose in the project's ecosystem.

Article from mickaelmosse.com