6 Differences Coin and Token in Crypto so as not to Misunderstand

Bittime – There are two important terms in crypto that you must know, namely coin and token. However, many people are still confused about the difference between coins and tokens, so they sometimes misunderstand them.

Therefore, in this article we will explain in detail how coins and tokens differ and provide simple examples of the application of this understanding. So, let's read this article until the end.

What is Crypto and How is it Different from Regular Money?

Crypto is a form of digital currency that uses cryptography to secure transactions. Unlike physical money, crypto is not printed by governments or financial institutions.

Instead, crypto operates on a decentralized system called a blockchain. In the crypto ecosystem, there are two main components: coins and tokens.

Blockchain is technology that permanently and verifiably records transactions. This ensures transparency and security in every crypto transaction. Each block in the blockchain contains information about transactions, and each block is connected to the previous block, creating an immutable chain.

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What Are Coins?

Coin is a type of crypto that has an independent blockchain. They operate as standalone digital currencies and can be used to carry out transactions without the need for another platform. Bitcoin is the most famous example of a coin.

Coins have similar characteristics to traditional currencies, such as functionality, divisibility, and portability. They are often used as a means of payment and storage of value.

What Are Tokens?

Tokens are digital assets built on top of existing blockchain platforms. They do not have their own blockchain but rely on other blockchains to operate. Tokens can represent a variety of things, such as an ownership stake, access to a service, or voting rights in a particular project.

Tokens often have specific functions in the crypto ecosystem. For example, some tokens are used to pay transaction fees, while others give their holders voting rights in project decisions.

Difference between Coins and Tokens

The main difference between coins and tokens lies in their structure and function. Coin has its own blockchain and functions as a standalone digital currency. Tokens, on the other hand, are built on top of existing blockchains and have more specific functions.

The following is a further explanation of the differences between coins and tokens in the crypto ecosystem.

1. Blockchain

Coin mHave your own independent blockchain. This means that the coin operates on a separate network and does not depend on other platforms. Example: Bitcoin, Ethereum. For your information, Bitcoin price in IDR currently more than IDR 1 billion and you can check the price in real time.

Meanwhile, tokens are built on existing blockchains, such as Ethereum or Binance Smart Chain. Tokens do not have their own blockchain and are dependent on the underlying platform. Example: ERC-20 tokens, BEP-20 tokens.

2. Main Function

Generally, coins function as a medium of exchange as well as a store of value. Coin is designed to be like a digital currency that can be used to purchase goods or services.

Tokens have more diverse functions, depending on the project. Tokens can be used as a means of payment, provide voting rights in project decisions, represent physical assets, or provide access to certain services.

3. How to Make It

Coin dcreated through a mining process that involves solving complex mathematical problems to get prizes in the form of coins. This process requires large computing resources.

Meanwhile, tokens are created through smart contracts that run on the blockchain. The process of making tokens is relatively easier and faster than making coins.

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4. Goals

Coin's main goal is to create a financial system that is decentralized and free from third party interference. The aim of tokens is to be more varied, starting from project funding, providing incentives to the community, to creating a decentralized application ecosystem (dApps).

5. Value

Coin value is usually determined by market demand and public perception of the project. Factors such as the technology used, the development team, and the coin supply also influence the value.

Token value is also influenced by the same factors as coins, but is also influenced by the utility of the token in the project ecosystem. The more utility a token has, the higher its potential to rise in value.

6. Regulation

Regulations on coins vary from country to country. Some countries have issued specific regulations for crypto assets, while other countries are still in the regulatory development stage.

Regulation of tokens also varies, depending on the type of token and the jurisdiction in which the token is traded. Some tokens are categorized as securities and are subject to capital market regulations.

Simple Example to Understand the Difference between Coins and Tokens

Think of blockchain as an apartment building. Coin is an apartment building itself, having an independent structure and systems. Meanwhile, the token is an apartment unit in the building.

Each apartment unit (token) has a different function and owner, but they are all in the same apartment building (blockchain).

Conclusion

Coins and tokens are two important components in the crypto ecosystem. Although both are digital assets, they have different characteristics and functions. Understanding the difference between coins and tokens can help you better understand the world of crypto and make smarter investment decisions.

How to Buy Crypto on Bittime

You can buy and sell crypto assets easily and safely via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also ensure you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. Study Complete Guide How to Buy Crypto on Bittime. 

Monitor graphic movement of Bitcoin (BTC) price, Ethereum (ETH), Solana (SOL), and other cryptos to find out today's crypto market trends in real-time on Bittime.