In cryptocurrency, “token” is often used as a synonym for “cryptocurrency.” cryptocurrency is a digital or virtual currency that uses cryptography and is difficult to counterfeit because of its security feature.
A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.
Often the two terms are interweaved and the term “cryptocurrency token” is used.The term “crypto currency” is different from a token.
According to investopedia “A cryptocurrency is a standard currency which is used for the sole purpose of making or receiving payments on the blockchain. While Crypto tokens are special kind of virtual currency tokens that reside on their own blockchains and represent an asset or utility.”
Moreover, Crypto tokens often serve as the transaction units on the blockchains . Cryptocurrencies are relative to their blockchains.
Consider, the unit of account on the Bitcoin blockchain is the Bitcoin token, and the unit of account on the Ethereum blockchain is the Ethereum token. Tokens cannot possess their own blockchain ,but depend or exist on an existing blockchain of a cryptocurrency.
Each Token has a unit value, that value is tradable. Cryptocurrency tokens are kept in wallets and can be exchanged using private/public key combinations.
Many cryptocurrency transactions are exchanged directly, but cryptocurrency exchanges like Binance exist to make converting tokens between each other and cashing out easier.
However, they are different types of tokens. They include utility tokens, security/equity tokens,asset coin and currency coin etc. Their purchase of a security token is seen as investment, while that of a utility token is not myseen as an investment.
Security tokens are subject to federal securities regulations. Utility tokens are not subject to federal securities regulations. Also, security token Represents equity or debt of a startup, whereas equity token Represents the license to use the product.
In addition, Tokens can represent basically any assets that are fungible and tradable, from commodities to loyalty points to even other cryptocurrencies. Tokens operate on top of a blockchain that facilitates the creation of decentralized applications.
What are Coins ?
Coins are an encrypted digital currency meant to be used as a form of payment. A coin is a unit of value that operates on its own blockchain, independently of any other platform. It can be used to store value and pay for services in much the same way that you would use physical money.Cryptocoins do not have a physical, real-world equivalent.
Hundreds of cryptocurrencies have been created since tthe inception of Bitcoin in 2009. According to Wikipedia “Bitcoin is currently the largest blockchain network, followed by Ripple, Ethereum and Tether.
In contrast to Bitcoin, Ethereum is a platform that allows people to build dApps, tokens and smart contracts. Its currency is called Ether (ETH). It’s advantage is its great speed. It is able to carry out transactions in seconds.
Basically, Ripple is a blockchain that is designed to be used by banks to make their payments faster. It is known as the banker’s coin, and there are many partnerships with global banks currently being worked on. It is known for its connection to right sources and Trustworthiness in market.
Litecoin is a fork of Bitcoin! So, basically, the blockchain of Litecoin used to be a part of Bitcoin’s blockchain, but it split when the Litecoin update was offered. So, it’s very similar but it has different features to Bitcoin. It was created to improve upon what Bitcoin had created. It is the first Crytocurrency to use a lightning network,which will tackle scalability.