Understanding That There is a Difference
With the explosive adoption of blockchain technology, there have been over 1000 cryptocurrencies created in a very short time. While they are all Cryptocurrencies it is important to understand that some are coins and some are tokens. We will get to the details shortly but for now just be aware that they are different. Many people will just call them all Cryptocurrencies but I have decided to name them accordingly for my own sanity. Cryptocurrency is the name I will always use for coins, Cryptotokens is the name I will always use for tokens. To make things even more confusing you will see Initial Coin Offerings (ICO) everywhere yet many of them are actually tokens. Regardless, in the menu to the left on this page I am listing only coins that have my attention. The last link in the menu to the left will take you to another menu with any tokens that have my attention.
Cryptocurrencies – Coins
The purpose of a coin is that it acts just like money and is a way to exchange or store value. Since major blockchains are open sourced, Coins take existing blockchains and modify the code with the aim of improving on it and creating something better. Depending on the project, better could mean faster, or more scalable, or more private, or have cheaper transaction fees, or be more integrative with current financial systems, or a combination of some or all of that. Coins use encryption techniques to regulate the units of currency and verify transfers without the need of central banks. Due to the massive adoption rate on a global scale, it is safe to assume that all fiat currencies may become Cryptocurrencies in the not so distant future, only they will be Cryptocurrencies that are controlled by central banks.
Cryptotokens – Tokens
Tokens work on the same blockchain technologies as Coins but also offer functionality beyond that of coins. Tokens favor using existing blockchain templates as opposed to modifying codes to create their own. These tokens usually launch as ICO’s as a way to fund projects and then, in turn, provide shares in that project. Each token will be focused on trying to be the best at solving a specific integration need rather than just try and act like a money. However, since they then end up having a value they can be traded, bought or sold just like Coins, so you can see how this can get a bit confusing. 99% of people you speak with will just call any coin or token a cryptocurrency, which is fine, but here at ElectroFX I choose to distinguish between the two because, well, that is my right.
Just to Confuse Matters More – Altcoins
You will often come across the term ‘Altcoins’ and this essentially just refers to anything that is not a major cryptocurrency. That goes for both coins and tokens. I don’t currently know of or follow any Crytotokens that are not an Altcoin. If I ever mention trading Altcoins and where to do so it does apply to both Cryptocurrencies and Cryptotokens.