Understand the distinction between cryptocurrencies known as coins and tokens, and their unique roles in the blockchain ecosystem.
What Are Coins?
Coins are digital currencies that operate on their own independent blockchain. Examples include Bitcoin, Ethereum, and Litecoin.
What Are Tokens?
Tokens are digital assets created on existing blockchains, typically through smart contracts. They can represent assets, rights, or utilities.
Types of Tokens
- Utility Tokens: Provide access to a product or service within a blockchain platform.
- Security Tokens: Represent ownership or investment in an asset, regulated like securities.
- Stablecoins: Tokens pegged to stable assets like fiat currencies.
Why the Difference Matters
Knowing the difference helps investors understand use cases, regulatory implications, and value propositions of various digital assets.
Recognizing coins versus tokens is key to navigating the diverse crypto landscape effectively.
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