Crypto Coins vs Tokens - What's The Difference?
One of the most common distinctions made in cryptocurrency is that between coins and tokens. To many newcomers it may seem like these are terms which are interchangable, however there is a key differrence between the two, crypto coins are mined and crypto tokens are distributed.
What is a Crypto Coin?
Crypto coins are often cryptocurrencies which are designed to interface and transact within the blockchain itself by users for trading and as a store of value.
The most famous example of a crypto coin is Bitcoin, these are crypto coins which are mined via proof of work and are used on the native blockchain to make transactions with. This is an asset which is designed for users to interact with on the native blockchain itself.
Crypto coins will have their own native blockhain, for instance Ethereum, Bitcoin, Solana and more.
What is a Crypto Token?
Crypto tokens are different first and foremost in how they are generated. Tokens are not created via mining but via how developers decide to distribute the token. An example of this is Boss Token which was distributed by developers and can not be mined.
Tokens are used to be held to unlock special features and actions, for example, staking, governance, yield farming, unlocking dApp features and more.
Boss Track dApp uses Boss Tokens to unlock premium features for example, the act of holding tokens in a wallet and the utility they bring is what gives the tokens value.
Tokens vs Coins, which is Better?
As you might guess, neither is better or worse in an objective sense as they both perform different tasks while still being cryptocurrencies. There is a market for both types of cryptocurrencies and compete to fulfil different results.
For example, tokens often times have transaction taxes which make them suitable for long term holding and using them for the utility but not suitable for making transactions for goods and services like a crypto coin would be.
Tokens by their nature are more centralized due to the distribution of the tokens being purely in the hands of the developers and more trust and due dillegence is required for potential buyers or investors.
Since many tokens are also smaller than coins in terms of liquidity, it is common for price fluctations to be more extreme, so upside and downside can be higher and as such caution should be exercised.
Tokens by their nature are more centralized due to the distribution of the tokens being purely in the hands of the developers and more trust and due dillegence is required for potential buyers or investors.
Since many tokens are also smaller than coins in terms of liquidity, it is common for price fluctations to be more extreme, so upside and downside can be higher and as such caution should be exercised.