Crypto Coin Vs Token — Which One To Choose In 2021?

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Crypto Coin Vs Token — Which One To Choose In 2021?

There are so many things to learn about cryptocurrency, the learning never stops. When it comes to Crypto coin Vs Token, there are a few things you need to know to be able to differentiate between these two digital assets. Some of the things you need to know about these crypto-assets include their definitions, functionalities, and the difference between them. For crypto investors, it will do you a lot of good to know the value of these crypto-assets to be able to make sound investment decisions. Crypto coin Vs Token is a question most crypto enthusiasts find difficult to answer. This article will leave you better off than it met you concerning the crypto coin Vs Token discourse.

What Is a Crypto Coin?

A crypto coin, popularly known as cryptocurrency is a decentralized digital currency that is not issued by any government or any of its central agencies. Crypto coins are based on blockchain technology and are secured by cryptography. This makes it impossible to counterfeit. Crypto coins are generally described as cryptocurrencies that have their blockchain technology.

The first crypto coin, Bitcoin was launched in 2009. Ever since then, the digital currency space has witnessed an impressive array of crypto coins. As of today, there are over 7,000 cryptocurrencies in the market that you can choose from. Most of them also have their use cases. One of the use cases of a crypto coin is the technology behind the currency. This technology is open to use by any and everybody, including other cryptocurrencies that do not have their blockchain technology. It is what gives a crypto coin its value and the prospect of an increase in value.

A crypto coin is created by a system called mining. The mining is done with the use of large and sophisticated computers. With these computers, users are able to solve complex equations and earn their reward in cryptocurrency, depending on the type that is mined. This process is what is called mining. Some of the popular crypto coins that exist today include:

  • Bitcoin;
  • Ethereum;
  • BNB;
  • Kucoin;
  • Solana.

Cryptocurrencies have their uses depending on the technology and the creators. Most crypto coins are usually created by corporations. For investors, it can be used as a store of value just like gold. Cryptocurrencies are known to increase in value subject to the dictates of the crypto market. If you invest smartly, it can be a form of a good investment. Crypto coins can also be used as a form of exchange for fiat currency, other cryptocurrencies. There are several crypto exchanges that offer users the platform to perform crypto transactions.You can also use crypto coins to pay for products and services. Many businesses and large corporations are now adopting cryptocurrencies as a form of exchange for their products and services.

Advantages of Crypto coins

Some of the advantages that have made crypto coins acceptable and relevant in today’s financial market include:

  1. Cheaper and Easy Transactions: The decentralized nature of crypto coins eliminates intermediaries which makes the transactions they are used for easier and cheaper. The peer-to-peer technology of cryptocurrency allows users to deal with themselves directly. This eliminates transaction fees charged by intermediaries.
  2. Secured Transactions: The crypto blockchain technology works in such a way that ensures the privacy of your transaction details. Your identity is also protected. Scammers are prevented from being able to reverse a transaction.
  3. Decentralization: The crypto blockchain technology has eliminated third-party monitoring and issuance like what is obtainable with fiat currency. There are only two parties to any crypto transaction. The sender and the receiver.

What Is A Crypto Token?

Crypto tokens, simply put, are cryptocurrencies that do not have their blockchain network. These types of digital tokens are built on other blockchain networks using the various DeFi platforms. A good example of these hosting blockchain networks is Ethereum. Ehtereum hosts a lot of digital tokens on its blockchain network.

There are currently thousands of crypto tokens in the market. Some of these crypto tokens include:

  • Tether (USDT);
  • USD coin (USDC);
  • UMA;
  • Basic Attention Token (BAT);
  • and DAI.

Tokens are primarily used for specific functionalities. For example, tokens can be used to vote or stake or for DeFi functions. A good example is the Brave Browser which uses the Basic Attention Token (BAT) to reward users of the browser. Users get paid in BAT when they view advertisements of partners of the browser.

Tokens function as a utility tool in the crypto space and they are also used to incentivize certain user behavior. Some of the functionalities of crypto tokens include:

  1. Access – Tokens can be used to gain access to a particular product or service. An example is the FIL token which is used to access the Filecoin platform.
  2. Security – Security tokens are issued during Security Token Offering. They majorly serve as proof of investment for real-world assets like equities and fixed income assets.
  3. Stablecoins – Stablecoins are tokens with a fixed value that are pegged against fiat currencies like the Dollar and Euro.
  4. Payment – Payment tokens enable the transfer of payment in exchange for products and services. These types of tokens are almost similar to crypto coins.
  5. Asset – Asset tokens are linked to real-world assets such as real estate and precious metals. An asset token can be used to represent a real-world investment.
  6. Non-fungible Tokens – These types of tokens can be virtual or real. They are sometimes used in online games.

Crypto Coin Vs Token, What’s The Difference?

To answer the investment question of Crypto Vs Token, you must know the difference. This will guide you on any investment decision on these two crypto assets. The difference between these two include:

1. Blockchain Network

Crypto coins are created and based on their distinctive blockchain network. That is, they have a technology backing them up. For every crypto coin created, there is a distinctive blockchain network.

Crypto tokens, on the other hand, are built on existing blockchain networks. In other words, they do not have a blockchain network of their own. At best, they may share similarities or compatibility with the blockchain network they are based on. They are a different digital asset altogether.

2. Means Of Payment

This is another essential difference between these digital assets. Crypto coins can be used as a means of payment for products and services. Most corporations and SME’s now accept crypto coins as a means of payment for their products and services.

Crypto Tokens, on the other hand, can not be used as a means of payment. They are created for other functions such as playing games, accessing platform-specific services, and participating in DeFi Mechanisms.

3. Ease Of Creation

Generally, crypto coins are more difficult to create than tokens. This is due to the fact that they have their blockchain network. Tokens are quite easy to create because they are built on an existing blockchain network.

4. Distribution

Crypto coins are distributed through mining while tokens are distributed through ICOs.

Crypto Coin vs Token, Which Is Worth More?

Generally, the value of an asset will determine your risk appetite for investing in such an asset. This is why financial advisors always advise that you know the worth or potential worth of what you are investing in. One of the ways to answer the Crypto coin vs token question is to know their value.

The worth of crypto coins varies and depends on the type of coin. Also, some inherent factors determine the value of a coin. Some of which include:

  • Demand and supply;
  • Utility of the coin;
  • The reputation of the company issuing the coin;
  • Project viability; and
  • Perceived value.

The most valuable crypto coin in the market today is Bitcoin, which also happens to be the first cryptocurrency. It is currently valued at $39,000 with the expectation that it will double that by the end of the year. The other top crypto coins include Ethereum, valued at $2,000. BNB, another popular crypto coin, is worth $332. Depending on the currency you want to invest in, crypto coins are generally known to increase in value over time, especially if the technology is relevant in the tech and finance space. You can research the value of any coin on various websites such as coinmarketcap.com.

This ad promotes cryptocurrency within the EU (by eToro Europe Ltd. and eToro UK Ltd.) & USA (by eToro USA LLC); which is highly volatile, unregulated in some EU countries and the UK., no EU consumer protection. Investments are subject to market risk, including the loss of principal.
This ad promotes cryptocurrency within the EU (by eToro Europe Ltd. and eToro UK Ltd.) & USA (by eToro USA LLC); which is highly volatile, unregulated in some EU countries and the UK., no EU consumer protection. Investments are subject to market risk, including the loss of principal.
This ad promotes cryptocurrency within the EU (by eToro Europe Ltd. and eToro UK Ltd.) & USA (by eToro USA LLC); which is highly volatile, unregulated in some EU countries and the UK., no EU consumer protection. Investments are subject to market risk, including the loss of principal.

Crypto tokens by nature are not as valuable as crypto coins. The major reason for this is because they do not serve as a means of exchange and they do not have a technology of their own. Nevertheless, some tokens are more valuable than some crypto coins. Tokens also have factors that determine their value in the market. Some of these factors include:

  • The allocation and distribution of the token;
  • The token model;
  • The supply rate of the token; and
  • The market capitalization.

There are several tokens with varying values. You can get a full list of tokens on various websites like CoinGecko.com. Tether (USDT) is valued at $1.00, while the Uniswap token is valued at $22.00. Some other tokens include Chainlink, valued at $22.00, Aave, valued at $320.00, and FTX token, valued at $36.00.

Which Should You Go For

The crypto vs token debate is an interesting one, depending on which side of the divide you fall in the crypto space. However, from this piece, it is quite obvious that crypto coins are a better choice than tokens. They have a better store of value, they have their blockchain network and they can be used as a means of exchange for products and services.

There are several crypto exchanges where you can buy any crypto of your choice. You can use fiat currency or other cryptocurrencies to exchange for any crypto coin of your choice. Some of these exchanges have their terms and conditions and you must familiarise yourself with them before using the platform. Examples of these exchanges include Coinbase, Kraken, Binance, Gemini, Kucoin, and so many others. If you don’t have an answer to the crypto coin vs toke debate yet, you can research and make your conclusion.

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