In cryptocurrency, coin and token are the factors that confuse people with their differences in cryptocurrency market. For the beginners, of cryptocurrency followers may get confused by this two factors. There is a slight difference between a coin and token and by this described article beginners can resolve their doubts.
What is Coin
The coin is an independent and it has its own platform which is known as Blockchain. Another name for the crypto coin is altcoin means alternative coin. For coins, there will be their own source codes, Blockchain etc. and they are independent to popularise their brand with unique features and implementations. The Blockchain and protocol of the coin support their native currency.
What is Token
In a word token is a dependent and it depends upon other platforms of Blockchain. First of all, tokens work as to fund the operating expenses to host a service and defines a protocol for the host. The second one, tokens are work as a model for creating shared computing resources in the meantime they control the resources decentralized. Most tokens are distributed at the time of Initial Coin Offerings (ICO).
Differences between coin and token:
A coin has its own Blockchain whereas a token will depend on another Blockchain like Ethereum etc. In one word coin has its own Blockchain but token works on other platforms of Blockchain. Whereas tokens are easy to create on other platforms when compared to coins. This tokens can easily prepare by customizing the codes of a specific protocol or by creating a Blockchain from the scratch. When compared to coins, creation of tokens is easy than coins.
Coins are like holding money of a person for trading or investing purpose but tokens can be regarded as a token of a gift. When compared to coins they are not distributed as rewards but tokens are widely distributed to the customers. But the value of tokens may be less when compared to coins.
Protocols of coins and tokens are also different from each other. Coins have its original protocols because of its own separate Blockchain. But tokens do not have any original protocols due to it does not consist of its own Blockchain and they run on other different platforms. By having original protocols there will be an opportunity to design different underlying codes and new features to the coin. The main difference between token and coin in protocol system is Blockchain.
A coin is always equal to money whereas tokens are will be available to use in various functionalities. Tokens can be used for different purposes but coins will be valued in the sense of money only. It means coins are mainly used in trading or investing but tokens can be used in different functionalities in cryptomarket.
Tokens are used mainly to introduce a new currency or product into the cryptomarket. Mainly all ICO’s came across with tokens and later you can get convert them into coins. Tokens are chief for the ICO of a new currency in the market and every coin now in the market came from by offering tokens only at beginning of the market.
When compared to coins tokens are infinite in the production of supply but the supply of coins is limited. So there will be no limit on the production of tokens but in case of coins, there will be limited supply. There will be a limit for coin supply according to market cap etc but tokens can produce infinitely.
To have a coin in your pocket the person can buy a coin in the form of liquid money according to market capital but tokens can available freely when the token sale ends. It is easy to get tokens freely but it is impossible to have a coin freely. By comparing two we can say that token can get easily.
Trading and Assets:
Moreover, coins are used for trading and investing money in the form of cryptocurrency. But tokens are used in getting some opportunities or benefits from the host platform or project because tokens use another platform as Blockchain. If we observe, coins are mostly used in trading and exchanging of money. Coins act as a medium of exchange of money but tokens act like assets or they can be utilized for other opportunities.
Coins are mineable by anyone because it has its own Blockchain but in case of tokens, it is not possible. Tokens are pre-mined they cannot be mined by others they will get mined by the developer only due to not having own Blockchain. In this case of mining, coins are easy to mine when compared to tokens.
In this summary, you can have the complete details of differences between the token and coin in cryptocurrency. By this beginners can understand the defined meaning of coin and token.