Although it appears to be semantics, it does make quite a big difference for a cryptocurrency as to whether it’s a coin or a token.
A “coin” has an entirely different blockchain from all the other coins that are out there while a “token” is built upon an existing blockchain project.
A “coin” is usually built using open-source blockchain code so what’s underpinning many of the coins that are out there is a very similar architecture. Many projects will add some unique features to build upon what’s open-source, but the foundation is mostly identical.
A “token,” these days, is most often built upon Ethereum, becoming an ERC-20 token. The web architecture of the Ethereum blockchain is robust and familiar, so developers often opt to use this to streamline their coin. One disadvantage is if the Ethereum network gets overloaded, the cost of interacting with a smart contract or sending your crypto from wallet to wallet is going to be relatively expensive.
It largely depends on how ambitious you want to be with your project and how it best fits your crypto's use case. It's important to remember too that what you started out as you don't have to stay forever. Your project can always fork over to become a new coin or a token on whatever blockchain your team believes makes the most sense.
Answered 3 years ago
There is no such thing as a crytocurrency token!
If it walks like a duck and it talks like a duck. It’s actually a duck. The fact that people bought some tokens, expecting to make a profit, by definition (and by law in most jurisdictions) equals all tokens to securities or perhaps coins.
For a token to be a cryptographically utilizable, one had to have some form of a token economy, proving how the token would be used inside a defined ecosystem. In most cases those token economies were built on untested and unproven assumptions, without even having products, let alone users or customers. White papers described thriving token-economies, which promised growing demand for tokens, which in turn would result in dramatic price increases, turning the investment very lucrative. The fact that profit was expected proved beyond a reasonable doubt that utility tokens were in fact securities or coins.
Most tokens described in ICO’s are in fact securities or coins.
Still not clarified? You could hit me up for an interaction.
Answered 3 years ago
This one can get a bit messy, so really it's best to only sum it up here in a rather basic way. I urge you to go Google the ins and outs of all this.
Usually a coin is a crypto designed to act as a form of money, means of value transfer, and that's it. i.e. Bitcoin and Litecoin to name but two.
Tokens are typically built on top of another blockchain such as Ethereum, like ERC20 tokes for instance. These tokens can act as a form of money and a means of transfer, but I that's not their real primary purpose. The main purpose is to act as a means of transacting within the dApp (decentralised application) or ecosystem of that project. Think of it like buying tokens at a fairground. You pay your money (dollars and cents) and get a handful of tokens in return to put into the machine that starts the rides. But in this case the token is used to pay to use a service like the dApp I mentioned.
One such example is the Theta token. Theta have a project surrounding decentralised video streaming. When it goes live, and if you choose to take part, you can either earn Theta tokens by renting our your bandwidth and personal computer processing power to others in your area to make video streaming smoother for them, or pay to receive streaming services by using your own Theta tokens. FYI : Theta was built on ETH as an ERC20 token originally but moved to it's own blockchain fairly recently.
Secondly there's projects like Digitex which was also built on the ETH blockchain as an ERC20 token. DGTX plans to build a Bitcoin futures trading exchange platform, but you have to buy the BTC futures contracts on their platform using DGTX tokens. You must first own some DGTX tokens before you can do anything on their platform, like the fairground example. No tokens ... no rides, because the rides don't accept anything other than the official fairground tokens you buy at the entrance gate.
Compare these two examples to BTC and you can see the difference. BTC was only ever designed to be digital dollars and cents. i.e. a way for me to send you $100 (or however much) quickly and easily peer-to-peer with no middle man. That's it's one and only purpose.
Of course I could also send you $100 of Theta tokens to settle a bill between us both, but that's a side issue. That's like saying I could either give you a $100 bill or $100 worth of potatoes. Same thing and all fine as long as you want $100 worth of potatoes.
Sadly it's not an easy thing to sum up quickly, so please do some further online reading to clear up the quirks of all this.
Answered 3 years ago
Coins are currencies that can be used for buying and selling things.
Crypto tokens are special kinds of virtual currency tokens and are used to fund-raise for crowd sales. They can also be used as a substitute for other things.
You can buy a token with a coin, but not vice versa.
Examples of coins:
Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH), Ripple (XRP), Stellar (XLM), NEO (NEO), NEM (XEM), Monero (XMR)
Examples of tokens:
EOS (Ethereum platform), TRON (Ethereum Platform), Tether (Omni platform)
There are big differences between crypto coins and crypto tokens, so it’s important that you know what they are!
This article https://www.epixelmlmsoftware.com/blog/difference-between-coins-and-tokens can help you in differentiating them with proper facts and valid points. It explains token and coin in detail with suitable examples.
Answered 2 years ago