Token

Coin vs Token: What’s the Difference

Grow the Empire

The words Coins and Tokens are often used as synonyms when referring to the crypto world, but there is a significant difference between the two terms. The reason these terms are used interchangeably is both of them fall under the domain of cryptocurrency and a layman uses these terminologies without paying much attention to their actual meanings. This scenario leads to not just confusion but also unconsciously neglecting the underlying meanings of each term.

From a lens of a commoner, both terms are almost the same but from an expert standpoint, there is a technical difference between them based on establishing each of them as cryptocurrency. Therefore, it is necessary to understand the difference between a coin and a token to make a wise investment decision. 

Today this blog will highlight the distinguishing features of Coins and Tokens to help you develop a better understanding of the crypto world. 

 

What is a Crypto Coin?

A coin is a cryptocurrency that has its blockchain. In simple words, crypto coins are native to the blockchain they run on. In order to build a coin, you need to build a blockchain from the scratch. A blockchain is created with a pre-built open-source chain. Building a coin is time-consuming and requires a certain level of technical knowledge, therefore it is not a simple task to launch a coin. Some of the famous coins are Bitcoin, Ethereum, Dogecoin, BNB, and more.  The following are features of a crypto coin:

Having Unique Blockchain

All crypto coins are run on their unique blockchain. The native cryptocurrencies have the original chains that are established especially for them. An independent chain offers to introduce exciting features and has a tendency to come up with new solutions. The true worth of a coin is defined by the level of efficiency and security of its blockchain.

Act as Cash  

Coins act as digital cash that is a substitute for hard cash in the virtual world. It provides security, has intrinsic value, and is a scarce resource. In some modern businesses, coins are accepted as cash payments such as Virgin Airlines, Mircosoft, Rakuten, Pizza Hut, and so on. 

Issued through Mining

In the crypto space, new coins are issued through a process called mining. Each time a transaction is validated by a participant, new coins are minted for the participants. Each user pays a transaction fee and this amount is spent on creating crypto rewards for them. 

What is a Crypto Token?

A token represents a digital asset or utility. They do not have their own blockchain rather they are built on existing blockchain. A token is a digital unit of value. The tokens are minted, not mined as coins, depending upon the conditions of issuing the crypto projects. Tokens are used to raise funds, creating liquidity pools and other financial utilities. 

Creating a token does not require much technical coding skills. However, building a token to provide greater utility requires a certain level of expertise. The digital contracts with terms and conditions are written into code on a blockchain known as smart contracts are deployed. Sometimes, tokens represent coins on different networks.  Some of the popular tokens are USD coin, Binance USB, FTX coin, and many more. The following are features of a crypto Token:

 

Raise Capital for Startups

Tokens are minted to raise capital for a project. This is done through a process called an initial coin offering (ICO).  The coins are sold to the investors through ICO. The tokens serve as their currency and provide users with access to various features after the projects’ launch. 

Asset Tokenization

It is a process by which digital tokens are created on blockchain that represents digital assets. Once a user buys this digital asset as an owner, no one can alter its ownership. Thus, making it an entirely immutable digital asset

Users’ Interaction

The projects based on tokens enable users to interact with one another through the project’s platform and services. This process helps in building the crypto community and fosters the growth of the crypto space. 

 

Empire as a Token

Based on our understanding of the difference between a coin and a token. Let’s explore EMPIRE as a crypto token. Empire token (EMPIRE) is a cryptocurrency that offers multiple use cases, starting from DeFi applications such as NFTs to real-world operations flexing the token’s utilities. EMPIRE is a token built on the Binance Smart Chain. Based on the theme “Keep Climbing”, it intends to fulfil present DeFi deficiencies. It will also implement innovative industry-accepted practices like the static RFI and automatic LP that ensure that liquidity is available at all times

 

Final Talk

With the help of this article, now you are ready to dive deep into the crypto space. To cut a long story short, if a cryptocurrency is based on its blockchain then it’s a coin and if it is built on an existing blockchain, then it’s a token. Once you identify the nature of cryptocurrency, you can automatically understand the associated features and utility it can provide you. Look for a coin when need to make payments and a token for availing use cases.

 

Keep Climbing!

 

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