Tutorial: Coin, altcoins and tokens

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Tutorial: Coin, altcoins and tokens

In cryptocurrency market a lot of terms that are confusing. For example, some confuse the word “tokens”, “coin” and “altcoins”. Tell, what’s the difference and why it matters.

If we talk about konah and tokens, the main difference between them lies in the method of their creation. Crypto tokens are created on the basis of its own blockchain. The blockchain, which is the basis of koina, operates by itself. That is, he confirms all the transactions, it ensures the reliability koina, it gives koinu value.

Tokens not created on the basis of its own independent blockchain. Rather, they arise on an existing platform.

Sometimes a token with a time transformirovalsya in the independent coin. When this happens, the Creator of the token starts a new blockchain. But until then, the token operates on the basis of an already existing blockchain.

Imagine this in the form of the building. The blockchain is always the Foundation. Which supports the cryptocurrency similar to how the Foundation of a building supports the entire structure.

If you follow this metaphor, the crypto coin is a new building. He needs his own Foundation, and it is not based on any other facilities.

On the other hand, the token is an add — in already existing buildings. To add to the house a new floor, you don’t need to re-pour the Foundation. You can build on top of what already exists. In principle, this is how a cryptocurrency token.

Coin, altcoins and tokens

Keeping in mind this design, you can divide the cryptocurrency space into two main parts.

First, it is the crypto coin, each of which has its own independent blockchain. The main one, which everyone knows — bitcoin. In particular, the creators of bitcoin have written reliable code, thanks to which there is a decentralized registry, allowing you to operate the currency.

Since the launch of bitcoin appeared a few coins, in fact, branched off from the original bitcoin code. These coin have slightly changed the blockchain of bitcoin.

These are coin like Namecoin, Peercoin, litecoin and others. As coin of this type has arisen based on the code of bitcoin, they are often called “alternative Konami” or abbreviated Althingi. Altcoins are a large class of crypto coins.

Secondly, it is the tokens. They do not use their own new blackany. Also they are variations of the original bitcoin code. Rather, they are run on the basis of existing blockchains.

One of the main platforms for creating token — Ethereum. There to do it is incredibly simple, and the goal of Ethereum is that developers and companies have created and launched their tokens on the basis of the blockchain.

Coin and tokens: what are they used For

Another important difference from coin tokens is that they have different scope. The value of coins, usually based on their own blockchain. This means that they are interchangeable and they can be traded. Cryptocurrency coin can be split into smaller monetary units, but their value remains constant.

As a result of all trading Konami relatively simple. They can also be exchanged for Fiat currency at an understandable rate.

Simply put, crypto coin mainly used as a currency. The owners of coin can buy goods and services. Also Konami can be traded.

Tokens are mainly used in primary placements (ICO). This is using the more popular method of raising funding for new start-UPS.

It is arranged so: the company uses the blockchain, for example, Ethereum in order to create and run your own token. Investors can buy these tokens and keep them for future profit or for trading.

The company uses were obtained during the ICO funds to begin work on the project. For owners of the tokens they are, in fact, shares in the company. Sometimes the company can transform the token into a coin. When this happens, the owners are changing their token tokens for coin that you can then use as a digital money.

Conclusion

In principle, coin and tokens similar to each other, as are all varieties of cryptocurrencies. And those and others based on the blockchain.

The difference lies in the method of their creation. Coins have there own independent blackany. Tokens are created on the basis of already existing blockchain.

This technical difference may seem insignificant. However, in most cases, people are not interested in the technical side of cryptocurrencies, and how to capitalize on them. And it is important to understand the difference between Konami and tokens from the point of view of their application in the real world and potential.

Coin, in fact, are independent currencies. Some users like to pay for their purchases. Other, “Hodler” investing in a coin and wait until they grow drastically in price.

Tokens, on the other hand, are usually used to attract start-up capital. So people who bought and stored the tokens, usually perceive them as investing in a startup. Only instead of the IPO it occurs in the form of ICO. For many it has become much easier and more affordable to invest in startups through tokens.

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