Unfiltered

Coins and Tokens: The Art of Subtle Difference?

The cryptocurrencies are divided into two categories, specifically Coins and Tokens. A lot of people barely know about the two and hence have them both jumbled up. They often end up using them interchangeably in conversations, which is not the case. Though these two assets are a lot similar in regards, they are fundamentally different from one another. Long story short, Coins basically refers to cryptocurrency which has its own blockchain and works independently. While, token refers to cryptocurrency that works and is based on existence on another platform, for instance, Ethereum, e.g., Tron and Bytom.

We can list down a few difference that is evident between the two and primarily this is the reason why these two are inherently different in their nature.

Structure

Coins are essentially digital financial assets. These are like fiat currencies because they can be exchanged and used for trading. Tokens are also financial assets but instead of being an actual asset, they are a representation of the actual financial asset. They are only of value when on a blockchain. Though they are separate entities and facilitate largely the creation of several other applications that are decentralized.

Infrastructure

Where coins use a unique and independent blockchain for each of their types, several tokens can be built on to the same blockchain. At the core, each coin has its blockchain completely independent of all other coins whereas it isn’t the same with tokens. For e.g., Ethereum has Golem, Augur, The Sandbox etc as its tokens.

Creation

As compared to coins, the creation of tokens is much easier. For coins, you need to come up with the new protocol from scratch to accommodate new features of each coin but with tokens, you can build it up easily you don’t have to create a new blockchain. They require the same codes and protocols to run, as similar to the blockchain you created for your coin. It’s much easier and quicker. You can come up with a new token with merely negligible modifications to the protocol, that too, in very few circumstances.

Ease and difficulty of creation

Due to the need to have a separate set of codes and protocols, the creation o cryptocurrency coin, the level of difficulty is higher. And the easy-going adaptable nature of the token and its ability to make sure of the same codes and protocols, creating tokens is a far easier job in comparison.

Platform of operation

The characteristics of coins are aligned with the everyday currency bills. They are designed to operate independently and be of value. They can be traded and used as a unit of measure for your financial assets. This is what gives its appeal of a currency.

Token, on the other hand, exist in-dependence to the blockchain. They are not capable of working in isolation neither they are direct financial assets. Thus, they have to be based on another platform for them to exist and operate.

Conclusion

Tokens and coin are two main branches of cryptocurrencies. Despite the similarities, they are fundamentally different from each other. You can Say they are two leaves of the same branch; each with its own existence but part of the same tree.

Soha Ali

As vanilla as it sounds, a filmmaker in the making. Soha brings the irony out of the crypto world by contributing to the Unfiltered section of BlockPublisher. Contact the editor at editor.unfiltered@blockpublisher.com

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