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What is the difference between tokens and Cryptocurrency

14 things you need to know about Bitcoin
14 things you need to know about Bitcoin

The Cryptocurrencies are very popular nowadays, and everyone wants to know more about them. Since the scope of Cryptocurrency and its investments have to increase a few days back, most of the people have a confusion related to its terms and products. If you want to know more about Cryptocurrency, don’t worry we will guide you through it.

What is the difference between tokens and Cryptocurrency
What is the difference between tokens and Cryptocurrency

What is Cryptocurrency?

First of all, you need to know the definition of Cryptocurrency; the Cryptocurrency is a virtual and digital currency which is secured and encrypted by the cryptography. The cryptography is known as the technique of encryption which secures it as well as verifies the transaction which is transfer. That is why the Bitcoin is recognized and represents the decentralized cryptocurrency. It is organizing and works with the public ledger and validates as well as records all the transactions, this is known as Blockchain.

There are many Cryptocurrencies which exists and consider other than the Bitcoin. But the primary importance of the Bitcoin is its digital realm which has achieves an essential milestone due to its decentralizing nature and distribution. Therefore the Bitcoin has played a crucial role in the diversity of Cryptocurrency ecosystem and expand other coins and tokens which are also regarded as Cryptocurrency but not all of this fall in the currency category.

Coins vs. Tokens: categories of Cryptocurrencies:

It is also essential to know that all the coins and tokens are considered as the Cryptocurrency even not all of the coins do not function as the medium of exchange or the currency.

It is also essential to understand what is currency; the term currency represents anything which stores the value, used as a medium of exchange as well as has any unit if the account in which a trisection is made. All of these features and characteristics can be seen in the Bitcoin that is why it is most commonly considered as the Cryptocurrency. The bitcoins also gives a boost acknowledgment to the Cryptocurrency since it is created. That is why the coins made after the bitcoins are even considered as the Cryptocurrency, but not all of them have complete features and characteristics of actual Currency.

Categories of Cryptocurrencies:

There are following most common types and categories of Cryptocurrency which are mention below:

  1. Altcoins (Alternative Cryptocurrency Coins)
  2. Tokens

Altcoins:

The Altcoins or Alternative Cryptocurrency Coins or pure Coin is also use as interchangeable. The coins are used as the alternative of the Bitcoin as well as the majority of the Altcoins are used as the variant of the bitcoin too called fork. These coins are building with bitcoin open source and protocol which change the codes underlying it. That is why you will get a new coin with entirely new and different features. Also, you can know more about the forks and its types such as hard forks and soft forks.

Some of the Altcoins are not a derivative of the open source Bitcoin protocol, and it has created by its protocol and Blockchain which is supported by the native currency. Some of the examples of these coins are the Ripple, Omni, Nxt, Waves, Counterparty and Ethereum etc.

Tokens:

The tokens represent any assets or utility in particular which resides on any other Blockchain. The Token represents the assets which are traceable and have different characteristics like the fungibles. Its value can be present by the commodities, other Cryptocurrency as well as loyalty points.

The creation and making of the token are pretty simple and straightforward as it doesn’t require any modification in codes from the particular protocol source or making a blockchain from the start. For creating a token, you have to follow a fix and standard template which is provided by the blockchain which allows you to make your token, some of the examples are Ethereum or Waves.

There is an entire technology which works on the creation of token by yourself which includes smart contacts self-executing computer codes which don’t require any third company or party to operate.

The tokens are distributed after the creation to the public through the ICO was also known as the Initial Coin Offering that means the crowdfunding which is done through releasing of token or new Cryptocurrency which will fund the development of the project. It is similar to the IPO which is an Initial Public Offering for bonds and stocks.

Conclusion:

The significant difference between the Token and Altcoin is the structure of both. The primary feature which differentiates between them is the Altcoin have its own and separate blockchain, and it is distinct currency as well. While the tokens are operated from the top blockchain which facilitates its creating. People can create their tokens while Altcoins needs specific codlings to be administered. Tokens represent the assets while Cryptocurrency has a virtual form of currency. The tokens don’t need any third party for its creation while the Cryptocurrency need it such as Bitcoins requires a complete process to create and transaction as well.

About the author: This post was written by Maria Zahid from cryptoagentbot.pro

About the author

Maria Zahid

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