{"id":23,"date":"2021-08-05T23:20:32","date_gmt":"2021-08-06T06:20:32","guid":{"rendered":"https:\/\/theplandanhollings.com\/?p=23"},"modified":"2021-10-07T15:01:45","modified_gmt":"2021-10-07T22:01:45","slug":"crypto-coins-vs-tokens-everything-you-need-to-know","status":"publish","type":"post","link":"https:\/\/theplandanhollings.com\/cryptocurrency\/crypto-coins-vs-tokens-everything-you-need-to-know\/","title":{"rendered":"Crypto Coins vs. Tokens: Everything You Need to Know"},"content":{"rendered":"\n
You\u2019ve likely heard the buzz around cryptocurrency. First, all those digital coins skyrocketing in value \u2014 but now there are tokens too? I mean, in March of 2021, digital artist Beeple sold a non-fungible token for nearly $70 million<\/a>.<\/p>\n\n\n\n A little confusion is understandable, especially when the differences and similarities between coins and tokens can enable entirely new billion-dollar industries.<\/p>\n\n\n\n That\u2019s why I\u2019ve broken down the differences and similarities between crypto coins and tokens. And by the end of this 5-minute guide, you\u2019ll know exactly what they mean for the future of the marketplace. <\/p>\n\n\n\n Here\u2019s a quick table of contents:<\/p>\n\n\n\n Before we can understand the differences and similarities between crypto tokens and coins, we need to know how blockchain works. The blockchain is simply a distributed ledger of transactions that is validated and secured cryptographically by a global network of computers. How do crypto coins and tokens fit into this whole picture?<\/p>\n\n\n\n Those definitions are a little broad, so let\u2019s delve further into the differences and similarities between crypto tokens and coins:<\/p>\n\n\n\n As we mentioned before, blockchains record transactions. What is being transacted? Coins and tokens! Every coin or token needs a platform to operate on, and blockchain networks serve this purpose.<\/p>\n\n\n\n Cryptocurrency is virtual money, so it\u2019s a store of value used to purchase and sell goods. Similarly, crypto tokens can also be used as a form of payment. Swiss Financial regulators FINMA call them \u2014 perhaps uncreatively \u2014 payment tokens.<\/p>\n\n\n\n Many refer to Bitcoin as digital gold. This is because they see Bitcoin (and other cryptocurrencies) as long-term stores of value. In the same vein, crypto tokens can be held as digital assets that grow in value over an extended period.<\/p>\n\n\n\n A cryptocurrency is native to its blockchain, so they have to be built at the same time. $BTC runs on the Bitcoin blockchain, Ether runs on the Ethereum blockchain, etc. A cryptocurrency and its native blockchain are inseparable from each other \u2014 it\u2019s the water running through the pipes. <\/p>\n\n\n\n Conversely, crypto tokens are created on top of an existing blockchain: for example, the Ethereum blockchain hosts ERC-20 tokens. Put simply, to make a new coin, you\u2019d have to build your own blockchain system. To create a new token, you can build on top of an existing blockchain.<\/p>\n\n\n\n Non-fungible tokens, or NFTs, are unique digital assets. You may have heard of artists (like Beeple) auctioning off NFTs for thousands, even millions of dollars. An NFT is a token that verifies ownership of a digital asset\u2014be it an image, video, GIF, or audio file. They function similarly to collectibles or fine art. Though the media itself can be replicated, the owner of the NFT retains ownership rights of the original. <\/p>\n\n\n\n Unlike cryptocurrency coins, NFTs are all unique: you can\u2019t trade one for another without first selling the asset for coins. But fungibility is a currency feature: you can swap 1 $BTC for another, and rest assured they\u2019re worth the same value.<\/p>\n\n\n\n As I covered previously, crypto tokens have more functionalities than coins. One such example is as a utility token: assets that grant the token owners access to specific platforms, membership groups, or smart contracts.<\/p>\n\n\n\n One of the most exciting new crypto applications is the tokenization of real-life assets. Real estate, vehicles, art, even electricity! When tokens on the blockchain represent these assets, they have lower transaction fees (since no agent or clearinghouse is needed with a smart contract) and enable fractional ownership (you could own 20% of a house instead of buying the whole thing).<\/p>\n\n\n\n In comparison, crypto coins represent money \u2014 meaning you would be able to buy these tokens with cryptocurrency. <\/p>\n\n\n\n Initially popularized via Initial Coin Offerings (ICOs), security tokens represent equity in a company. These tokens are purchased with the explicit intention of making a profit. Tokens that represent the real-life assets mentioned earlier could (in some cases) be considered security tokens. <\/p>\n\n\n\n FINMA treats security tokens just like any other security, solidifying their similarity to traditional stocks. On the other hand, coins would be used to purchase <\/em>a security token, not represent equity in an organization.<\/p>\n\n\n\n Regardless of coin or token, one fact remains true: crypto enables new kinds of investment, fractional ownership, and opportunities to profit. With so much information and complexity out there, it can be daunting to try and figure out how to leverage crypto to make money.<\/p>\n\n\n\n Luckily for you, The Plan with Dan Hollings demystifies the cryptocurrency trading world to make it easy and approachable. Built using years of experience in marketing and crypto bots, Dan Hollings\u2019 crypto training program will show you how to turn the crypto market into a passive income machine. Curious? Learn more here.<\/a><\/p>\n\n\n\n Cryptocurrency coins are units of value. They\u2019re blockchain-native digital money that can be used to buy and sell things. Tokens are built on top of blockchain networks and can serve as money \u2014 like coins \u2014 but also possess other functionalities, like representing real-life assets, enabling access to decentralized apps and services, or minting collectibles.<\/p>\n\n\n\n Coins are better used to facilitate transactions on the blockchain. Tokens are better for representing valuables (like real estate, collectibles, and securities) or permitting access to dApps and DAOs (like Musicoin\u2019s streaming service or Friends With Benefits\u2019 membership group). <\/p>\n\n\n\n Ethereum is a blockchain network, meaning it\u2019s a cryptographically secured ledger that records transactions. Those transactions are done in Ether, the cryptocurrency coin native to the Ethereum blockchain. Tokens, called ERC-20 tokens, can be minted on the Ethereum blockchain and bought or sold using Ether.<\/p>\n","protected":false},"excerpt":{"rendered":" You\u2019ve likely heard the buzz around cryptocurrency. First, all those digital coins skyrocketing in value \u2014 but now there are tokens too? I mean, in March of 2021, digital artist Beeple sold a non-fungible token for nearly $70 million. A…<\/p>\n","protected":false},"author":1,"featured_media":107,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_kad_blocks_custom_css":"","_kad_blocks_head_custom_js":"","_kad_blocks_body_custom_js":"","_kad_blocks_footer_custom_js":"","_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"unboxed","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false},"categories":[25],"tags":[12,13,15,14,16,17,20,21,22],"yoast_head":"\nWhat Is Blockchain vs. Token vs. Coin<\/strong><\/h2>\n\n\n\n
Crypto Token vs Coin: The Similarities<\/strong><\/h2>\n\n\n\n
Both are reliant on the blockchain<\/strong><\/h3>\n\n\n\n
Both can be used as payment<\/strong><\/h3>\n\n\n\n
Both can be held as investments<\/strong><\/h3>\n\n\n\n
Crypto Token vs Coin: The Differences<\/strong><\/h2>\n\n\n\n
They\u2019re created differently<\/strong><\/h3>\n\n\n\n
Tokens can be non-fungible<\/strong><\/h3>\n\n\n\n
Tokens can provide access to dApps and DAOs<\/strong><\/h3>\n\n\n\n
Tokens can represent physical things<\/strong><\/h3>\n\n\n\n
Tokens can represent equity in projects and organizations<\/strong><\/h3>\n\n\n\n
You Can Take Advantage of the Crypto World<\/strong><\/h2>\n\n\n\n
Frequently Asked Questions<\/strong><\/h2>\n\n\n\n
What is the difference between a crypto coin and token?<\/strong><\/h3>\n\n\n\n
Which is better, token or coin?<\/strong><\/h3>\n\n\n\n
Is Ethereum a coin or a token?<\/strong><\/h3>\n\n\n\n