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Crypto Coin vs. Crypto Token: Know the Difference

Blockchain Terminology

Crypto Coins and Crypto Tokens are terminology used very casually as a matter of discourse. But are you really sure about the differences between them? In this article, we’ll explain crypto tokens and crypto coins and how they differ from each other. If you don’t know, read on! Even if you do know, read on, this is a comprehensive overview, and you might learn something you don’t know already.

Coins vs Tokens

A crypto coin is a crypto token but a crypto token need not be a crypto coin. Despite their common usage, they are completely different. Let’s go through the details using the definitions.

A crypto coin is a unit of currency that is used to represent or quantify the value of a cryptocurrency belonging to anyone. Two crypto coins of the same name are identical – for all practical purposes, identical. One can be exchanged for another. An example would be two Bitcoin cryptocurrency coins. Crypto coins are stored strictly on blockchain. They were meant to be a replacement for fiat money but that never happened. A new form of asset was created instead.

A crypto token is not limited to just coins. A token consists of a proof of ownership, either whole or fractional, of an asset, which may be real or digital or virtual. No surprises – NFTs are tokens. They are bought using coins or fiat money. Tokens are found explicitly only on smart contracts. They represent an ownership of an asset to a single individual or a single entity.

Crypto Coins

Crypto coins need to be mined according to the consensus mechanism of the blockchain that is being used. A crypto coin is not transferred from one person to another – the bank balances of each party are updated instead. In this way, it is very similar to real (fiat) money. Notice the contrast with NFTs. Crypto coins can belong to anyone.

Crypto coin creation usually takes substantial resources, such as the money raised during an ICO. The Bitcoin blockchain is the best example of the energy waste and the redundant calculation involved in certain old blockchains that use Proof-of-Work. Proof-of-Stake is much more common usually used these days and is far more environmentally friendly.

The actual monetary value fluctuates according to the cryptocurrency market conditions. Tokens that are not coins are also variable but have uses other than money. And of course, once the blockchain data is stored, it becomes immutable. Cannot be changed in the future. This is in stark contrast with a crypto token.

Crypto coins can be easily liquidated. In other words, it can be turned into cash extremely quickly and extremely fast. Thus, it is said to be a highly liquid asset. Crypto coins are most usually bought by traders, who by the fluctuating continuously shifting nature of the market attempt to make profits and ‘buy low, sell high’. Others buy in large volumes and they expect to hold the coins for months or years at a time. They are often called HODL-ers (Hold On For Dear Life).

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Crypto Tokens

Crypto Tokens are fundamentally different in most cases. Tokens that are not coins usually represent the ownership (whole or fractional) of a real world or a virtual (digital) asset. We have different types of tokens – security tokens, utility tokens, ownership tokens, company shares tokens, tokens for every real and virtual type of asset that is.

Crypto Tokens that are not coins represent assets. They usually belong to one person or entity. They operate only by smart contracts. This is one of the most important differences between coins and tokens. Coins live on a blockchain, but other tokens live only in smart contracts. Their valuation can fluctuate, but, for example, a security token representing land can increase or decrease in price, but not with the volatility of crypto coins. Also, a token can belong to only one entity and is (canonically) said to be unique, with practical exceptions.

Of course, a completely identical copy of a digital asset like an NFT can be made trivially. However, its value is represented in a smart contract that can refer to only one person. NFTs are the most common example. In auctions, NFTs are sold for huge prices by celebrities and various entrepreneurs, but crypto coins are in a non-stop state of flux or continuous change.

To repeat: coins can be tokens but not all tokens are coins. Tokens are the technology underlying Smart Contracts and the entire DeFi ecosystem. Coins serve a purpose similar to money. Tokens serve a purpose similar to physical or virtual items being bought at an auction. They are stable. (Most of them except coins and NFTs).

Importance in Web 3.0

Web 3.0 is an entirely new and novel methodology for operating the web itself. If you compare it to a car, the fuel is cryptocurrencies, the wheels are connectivity, and the engine is a utility token. That is how a frictionless decentralized wed is such a revolution in governance and the main challenge for the tech unicorns of the future. The entire system requires cryptocurrency to operate on crypto tokens. These tokens can represent anything of the owner’s choice according to the way in which they are minted.

Tokens represents assets. Coins represent money. Literally, it is as simple as that. The revolution is brought in when we do not use a central authority – a bank or a country’s native currency – to manage transactions. The future is decentralized, automated, and so far, yet to be regulated. The regulations that governments impose may be the most serious threat to Web 3.0 yet. In 2022, the government of India took the approach of the government of the USA and imposed a 33% tax as the government’s regulatory measure for all cryptocurrency transactions.

Tokenization

This is going to be the next big step. Tokenization refers to the act of tokenizing everything, every asset, land, houses, cars, buildings, hotels, electricity, Internet and and possible asset into a token. This is a massively popular use case, and the shares and futures market cap is estimated to be – hold your breath - 5 trillion USD by the year 2030! The current valuation is expected to be 2.3 billion USD. It is expected to grow to around at least around 6 billion by 2025, according to the latest study by Forbes. But what is tokenization, and why is it spoken of in an article on crypto coins versus crypto tokens?

The answer – crypto tokens and crypto coins are the two cornerstones for tokenization. The other two cornerstones are, of course, blockchain itself, and a free and fair system of regulations. Utility tokens and security tokens are expected to boom in 2023-2030, and eventually, even the shar market and the shares of every company will be tokenized.

The Bright Side

The world is going to change like its never changed before. Billionaires will exist all over the world, millionaires will become common, wherever there is access to Internet. We could empower environmental measures like electric cars and artificial meat. We can create coins for any use case possible. In theory, we could even ensure a universal global worldwide minimum income by the year 2025. If you don’t know a thing about crypto, start learning! Because it will definitely have a massive impact on the future of humanity.

The Dark Side

The huge boom in valuation may be meaningless if we do not distribute the wealth equally in society. Currently, 10% of the global population holds 90% of the wealth. The crypt industry could skew that value to 1% of the global population holding 99% of the wealth. This is a serious problem, and we need to value humans above money. We need to focus on helping the poor and the marginalized. Otherwise, they will be lost in a bloodbath f inflationary prices, and added riches into the market will cause global inflation, driving the price of all assets beyond the reach of anyone who does not hold crypto coins or tokens.

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Role of Government Regulation in Coins and Tokens

There needs to be strict regulation for every crypto endeavour that seeks to equalize the gained profit among society. This can only happen with a sincere, caring government. It is true that such a consortium may never happen, and the burden of equalizing the gains among society of monetizing tokens with coins may result in an ultra-rich but ultra-small group of people. That government also needs to be humane. If a government collects 33% tax but holds on to it and does not equitably share the wealth among all of society, our civilization may become dysfunctional. It is a real challenge in the integrity of every law-making body anywhere.

Conclusion

So now you know what a crypto coin is, what a crypto token is, and what the difference is. You also now have come to the understanding that crypto will take off like nothing we have ever imagined. So get on the crypto powered rocket. Aim for the stars and you might even hit the moon! Aim for profits in the general case immediately apply yourself to the tokenization movement and crypto adoption movement that will sweep across every corner of our society.

Get into buying bitcoin (BTC) now before it hits 100,000 USD. Because, as you may have concluded from reading this article, that is an entirely viable and possible scenario. Whether you like it or not crypto is here to say. Make the most of what little time we have before the price rockets upward and you could find yourself in a very good position. But and acquire as many crypto tokens / assets with your crypto coins as possible. All the very best!

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