what is difference between token and coin ?
At first glance, for those who are new to the digital currency market , Token and Coin may have the same meaning and may even be used elsewhere. But this is not the case and the two are different.
In this article, while getting acquainted with the definitions of tokens and coins, we will become more familiar with its uses and types, and we will review concepts such as token burning and some other terms related to tokens and coins.
What is a token?
A token is a cryptocurrency or digital currency that does not have an independent blockchain of its own and is actually deployed on other networks such as Atrium , Binance Chain , EOS, and Tezos . Coin , on the other hand, is a digital currency that has its own independent blockchain. In fact, one of the main differences between Quinn and Token is related to blockchain.
For example, cryptocurrencies such as Bitcoin and Atrium have their own proprietary blockchains. The number of cryptocurrencies that have their own blockchain is not small in the market and they are classified as coins. But the number of tokens on the market is not small. For example, Teter, China Link, Aave and DAI are popular tokens and have their own fans in the market.
Keep in mind that when we take a closer look at the digital currency market, the difference between coins and tokens makes sense.
Token application
Tokens can have different uses depending on the type. For example, they can be used to make various payments. Or sometimes they are paid as a reward for participating in a network. In smart contracts, tokens are used as a method of payment between the parties to the transaction. Tokens can even be used to vote on some networks.
Important features of tokens
Tokens have important general characteristics. For example, they are programmable and can be easily created with programming languages. In addition, tokens do not require a license to use, and this is one of their features. Token transactions have the necessary transparency, and this is one of their features.
Token launch
Developers may have trouble making tokens and coins. It should be noted that building tokens for blockchain developers is an easier task than setting up a blockchain and creating an independent network. As a result, in most projects, developers prefer to use existing blockchains to achieve their goals without having to incur heavy costs and create an independent package.
As a result, most tokens that do not have an independent blockchain are easily created. But in some projects the situation is different and first their blockchain is developed and then that project enters the initial public offering of coins or ICO to be able to attract the initial capital needed. Some tokens, once sufficiently developed, move to their own blockchain and the corresponding token becomes a coin.
How do we know if it's a cryptocurrency or a token?
You can get acquainted with the variety of coins and tokens on the Coinmarketcap website . To find out if it is a token cipher or coin, you can visit its page on the coin Market Cup website and read the information published about it. Consider the Aave ciphers, for example.
By referring to the relevant website at the top of the page next to Ramzarz name and after determining its rank based on market value, it also shows its status. According to the image provided by this website, it is clear that Aave is a token and the phrase Token is also included there.
The same information about other cryptocurrencies has been published on the Kevin Market Cap website. For example, next to the name of Bitcoin ciphers with the abbreviation BTC, it is mentioned that it is a coin, which can be seen in the image below.
As you can see in the picture above, after the color or rank of bitcoin, its type is mentioned, ie it is a coin. Therefore, for each of the cryptocurrencies, you can easily get good information about their tokens or coins by visiting the Quinn Market Cup website.
The difference between Token and Quinn
The first difference between tokens and quinces is their blockchain, and as mentioned, the token is a cryptocurrency that does not have an independent blockchain of its own and is actually deployed on other networks such as Atrium. Quinn, on the other hand, is a digital currency that has its own independent blockchain.
In fact, coins such as bitcoins are located on a native, dedicated blockchain network, but tokens are created on existing blockchains.
Another major difference between coins and tokens is that coins have a monetary value and are a kind of digital currency. Tokens, on the other hand, generally have a wider range of uses, depending on the application that is defined for them.
Other differences between Quinn and Token include their differences in the way they are created. Quinn, for example, is obtained by extraction and has complex calculations. But this is not the case with tokens, for example, and they are mostly distributed through initial public offering or ICOs .
Also, to create tokens, it can be done easily through programming, but creating coins is not as simple as tokens.
Types of tokens
There are different types of tokens. In one classification, tokens can be classified into two general categories : Fungible tokens and Non-fungible tokens, which are described below as each of the tokens and tokens. Proverbs can also be classified into three general categories.
Proverbial tokens and non-proverbial tokens
Fungible token means that it can be exchanged for other units. At present, market tokens are often among the proverbial assets.
When it comes to heterogeneous assets or NFTs , their market is also growing rapidly. For example, assets such as smartphones and laptops are unparalleled assets. NFT assets, which are digital assets, are also stored and transferred on the blockchain. To better understand such assets, it should be noted that most assets such as game tokens and some Jero artwork are unparalleled digital assets.
Currently, 99% of market tokens, such as Tetra and China, are link-like, and all units are similar in value and interchangeable, but the NFT field is expanding day by day, and non-counter-tokens are likely to occupy a larger share of the market in the future.
As mentioned, proxy tokens are divided into three main categories: 1- functional token 2- securities token 3- government token
What is a functional token?
Utility Token is a cryptocurrency that is used to pay or buy goods and services. It should be noted that most crypto tokens in the market are practical tokens . The value of such tokens is usually determined by the amount of supply and demand in the market.
What is a securities token?
The Security Token was introduced in 2018 and is actually a cryptocurrency whose owner actually owns part of a company's assets or even its profits. Securities tokens are something like corporate stocks that investors can buy and invest in as tokens .
It should be noted that securities tokens must be registered so that investors can participate in the financial activities of companies. Legislatures can determine if a securities token is legally registered . In this way, investors can invest in these projects with greater confidence.
Given that it is easy to invest in securities tokens through the blockchain network, it therefore has advantages over traditional securities . Users can also easily store tokens in their software wallet and it is not difficult to transfer. As such tokens are registered by regulators and legislators, they are therefore highly reliable and less risky.
What is a governance token?
Governance token is a cryptocurrency whose owner can have the right to vote in some decisions through such property. For example, the holder of a token can comment on the key decisions of an exchange and have the right to vote on the decisions. In many cases, government tokens fall into the category of functional tokens.
Classification of tokens according to the Swiss FINMA guide
The Swiss Institute of Financial Legislation has also considered the classification for tokens and in the FINMA guide has divided the tokens into four categories, which are: 1- Practical tokens 2- Payment tokens 3- Securities tokens 4- Stock tokens
Utility Tokens are available in limited numbers and are used to access certain products or services.
Payment Tokens are also used to pay for goods and services.
Security Tokens are an investment in initial public offering (ICO) tokens that investors invest in to make a profit.
Equity Tokens are actually buying shares of companies in the form of tokens that investors share in the shares of companies.
How are tokens made and created?
The question may arise as to how tokens are created. It should be noted that in the blockchain platform, tokens can be created with programming languages. Developers use programming languages to create a token and create smart contracts . Atrium, for example, hosts many tokens on the market, and in addition to Atrium, other platforms are used to generate tokens, and the standard used to generate tokens on this platform is ERC-20. It should be noted that creating a token is not difficult at first glance , but if this token does not pursue a specific purpose and has no application, it is certainly worthless.
The issue of fraud is very important in the discussion of tokens. For example, a worthless token may be created and its developers may be able to exchange worthless tokens for large sums of money and divert capital by misleading investors . In practice, however, their tokens are worthless and only deprive investors of their capital.
Investing in some tokens causes investors to lose only their money and capital and suffer huge losses.
Token wallet
Wallets can be used to store tokens . Wallet based on China block address allows you to store and transfer tokens on different platforms. For example, if a token is created on the Atrium platform , investors can use Atrium wallets to store and transfer.
The same is true on other platforms, where investors can store tokens in each coin wallet. Some tokens also have their own wallets.
What is token burning?
Token Burning or Coin Burning is one of the terms you may have heard in the digital currency market. But what does token burning mean? It should be said that tokenization is a process in which a number of tokens or coins are deliberately removed from the cycle with a specific program or so-called burned . In token burning, different goals are usually pursued and this is done purposefully. There are different ways to burn tokens, and developers choose a method for making tokens based on their needs and the goals they pursue.
In token burning or coin burning, some of the cryptocurrencies are usually removed from the inventory permanently, and this decision is usually made by the development team of that coin or token. The development team actually decides to control the release of those cryptocurrencies and increase their value. For this reason, it removes a number of tokens or coins from the cycle. Of course, this process does not happen for all digital currencies, but for some pennies and tokens that do not have high market value, this is done to encourage investors to invest.
In token burning, tokens are moved to an unknown address or eater address and are not accessible and no one can access them. In this case, the relevant passwords will be irreversibly removed from the cycle and destroyed. Usually the value of the cryptocurrency increases after token burning. Keep in mind that token burning has a number of reasons why increasing the value of that cryptocurrency is just one of the goals that developers are pursuing.
The future of the cryptocurrency market
The cryptocurrency market has fluctuated a lot, and these fluctuations have reached a peak in recent months. Entering the digital currency market requires sufficient knowledge and insight into the crypto market, otherwise it can have dire consequences, including loss of capital.
In recent months, meta -cryptocurrencies have received a great deal of attention. NFTs were also highly regarded by the market over time. The fluctuations of the crypto market are intensified by some news and government decisions, and it remains to be seen whether this market will grow or be doomed in the future.
Frequently Asked Questions About Tokens
What is a token?
A token is a cryptocurrency or digital currency that does not have an independent blockchain of its own and is actually deployed on other networks such as Atrium , Binance Chain , EOS, and Tezos .
What is Coin?
Coin is a digital currency that has its own independent blockchain. In fact, one of the main differences between Quinn and Token is related to blockchain.
What is the difference between Token and Coin?
The first difference between tokens and quinces is their blockchain, and as mentioned, the token is a cryptocurrency that does not have an independent blockchain of its own and is actually deployed on other networks such as Atrium. Quinn, on the other hand, is a digital currency that has its own independent blockchain.
What is token burning?
Token Burning or Coin Burning is a process in which a number of tokens or coins are intentionally removed from the cycle or so-called burned with a specific program.