Difference Between Cryptocurrency and Token
Difference Between Cryptocurrency and Token
Today we're going to cover a simple, yet often mistaken topic. We're going to talk about how cryptocurrency coins are different from tokens.
They're both run on blockchain technology, and they're both traded quite similarly, but they're actually quite different, so let's just cut to the chase and get started.
To begin with let's recap our knowledge on what let's just cut to the chase and get started.
blockchain is like a digital ledger, each block is a period of time where transactions occur entries are recorded by all the people who possess the block game when the time comes in the block is finalized the transactions are locked in the next block begins building on top of the previous one plus all the others that came before it users have the specific cryptocurrency don't actually hold their coins or tokens they hold but keys The transactions are locked in. Then the next block begins building on top of the previous one plus all the others that came before it. Users who have the specific cryptocurrency don't actually hold their coins or tokens, they hold the keys that allow them to make an entry on the blockchain that states the coins or tokens are being sentenced somewhere else out of their control. This is how blessings that power cryptocurrencies work. An interesting thing about watching that just about any information can be recorded on not just the currency that is associate. This allows even for the ownership of objects or resources to be recorded on the blockchain. And this is where the difference begins. If we step back a bit and look at what apparently coin is, the difference gets pretty obvious, to begin with, coins run on their own blockchain. Many are alterations of the Bitcoin blockchain, many others are completely unique. But they are all completely self-sufficient. Additionally, their value is derived solely from their existence. They are currency meant to be used to facilitate payments. Ultimately, they're worth something because people have decided what they're working on. Cryptocurrencies, like a serial, are considered coins, but you are unlikely to see Ether widely accepted as currency for purchasing goods. Ether is meant to be the currency of the Etherium network. This network allows other cryptocurrency projects to operate on top of creating and maintaining your own blockchain. Can be quite difficult for smaller projects with more niche versus instead many operate on top of the theory of network. And users of the currency to pay small fees in ether and short ether is a coin because it runs on its own blockchain and only gains value simply through its existence. It is not paid to many other things people want it. People want to use it. Therefore it has value. Those cryptocurrencies that run on the network are not points, they are targets, not operating on your own blockchain is enough to be considered a token in the wider crypto community. Additionally, though I want to talk about what's the advantage of Connecticut. Many of these projects running on the interior network and gain value from their specific purpose. This goes beyond the intrinsic value that coins allowed many token cryptocurrencies are actually backed by something. When you trade a token, you also trading was backing that token. There is a wide range of what this can be, so just go over a couple of examples to get your head around what tokens can do. secret ownership of anything on the blockchain you can make a token for the trade event one use case would be the tokenization of gold company could buy 1000 ounces of gold and create 1000 gold bucks they could then sell those gold bucks to people for the price they choose probably similar to one ounce of gold would cost with the guarantee that one goal book is worth 1 She was probably similar. One ounce of gold costs with the guarantee that one gold Buck is worth one ounce of gold. The person would only trade them a go Buck to get out. So go back. This allows people to trade gold round instantly without physically move the goal and any person who wants to physically claim the cold can by just turning in the token. All transactions with this to kid would have their fees paper with ether and not the token itself. Chickens don't necessarily have to be back by something physical, though they can simply be currency, a very specific service purpose. This can be a lot of things. For instance, you have a site where there's a token that gives you the ability to listen to music, kind of like an alternative Spotify. Instead of paying a monthly fee for access to the entire library of stuff, you may be like, you could instead buy a bunch of these tokens and cash them in to listen to your favorite songs. Like quarter logic box. This has two benefits. One, you're not anything you don't care about, and two musicians more directly benefit themselves. He probably won't buy dinner with music tokens, but you can support your favorite musicians at a fair price. these are just a couple examples of targets there are a lot Make sense for crypto out there that almost no one could have imagined, and I'm sure there's a lot more that people have yet. These are just a couple of examples of tickets. There are a lot of use cases for crypto out there that almost no one could have imagined, and I'm sure there's a lot more that people have yet to imagine. Also, to be clear, the Athyrium at work is not the only one that could utilize. Several cryptocurrency projects operate networks, similar to Etherium. Like any market, there is a lot of competition now. Before we wrap this up, let's recap the difference. Primarily, coins run on their own watching, but secondarily, their value is almost always intrinsic, meaning their value is dependent on people's belief in the currency. The primary desire for weapons are is that they run on top of a blockchain that they don't control. Additionally, many derive value from their use case just to give me access to specific services. The trade of certain resources. Or many other unforeseen opportunities. Not everybody in the coming months will be making the physics basics course that the primer course that we did when the first channel first began. Channel has really developed a lot since the original court, so I think it is time we remove it. Keep an eye out for it.