Since the launch of Bitcoin in 2009, thousands of cryptocurrencies have been created, all of them has their own unique functions and what they are used for.
First of all, what are cryptocurrencies?
Cryptocurrencies are digital assets or you can call it a virtual assets that uses cryptography to secure and operate the decentralized network that is powered by a blockchain technology.
These cryptocurrencies are available online and is not controlled by government or any central authorities like banks.
Understanding the difference is key to learning how blockchain technology truly works.
Cryptocurrencies are categorize into coins and token, so let's look at the differences between them.
Many beginners sometimes are always confused when they here of coin or token.
Coins are digital currencies that works on its own blockchain. They are just like currency centralize money primary used for payments, or store values since it has minimum supply.
They are the one we used to pay for transaction fees (gas fee). Crypto starts with coin before moving to tokens.
The examples of coins are: Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Binance (BNB), Ripple (XRP) and lots more.
Token are also digital asset that exist on another blockchain, and are made using Smart Contract technology. They are used as currency, they have ownership right, access privilege or voting power.
Tokens are broader, it covers: Utility Tokens, governance Token, security, stablecoins, and NFTs all this tokens have their different meanings.
Source
In conclusion, Cryptocurrencies are divided into coins and token and each are serving different purpose in different the blockchain world.
Coin operate on their own blockchain and act as digital money, while tokens are build on other blockchain.
Knowing this differences will help investors make good discussions and understand how it works.
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