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Liza Jovan 🎩Ⓜ️💟✨
@lizajovan
➡️ CRYPTO COINS VS CRYPTO TOKENS Thanks alot : @i-d0-care & /moxie-africa The terms “coin” and “token” are often used interchangeably within crypto, but it is important for investors to understand the differences between them. 📌 What are crypto coins? A crypto coin is a virtual currency. It exists as a unit of value and can be used as a payment method and medium of exchange in the same way that fiat currency can. Unlike fiat currency, however, crypto coins offer investors an alternative to traditional and centralised banking. Bitcoin, the world’s largest cryptocurrency, is perhaps the best example of a crypto coin. It exists upon its own, decentralised ledger – the Bitcoin blockchain – and is often referred to as “digital gold”. 👇🏻👇🏻👇🏻
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Liza Jovan 🎩Ⓜ️💟✨
@lizajovan
📌 What are crypto tokens? Crypto tokens differ from crypto coins. A crypto token is a digital representation of an asset, built on a blockchain, and its primary purpose is to be used within the wider blockchain ecosystem (often referred to as the “metaverse”) to facilitate interaction and innovation within a network’s community. Crypto tokens are usually made available to investors in an ICO (initial coin offering). ICOs provide investors with crypto tokens in exchange for an initial investment, but crypto tokens can also be traded amongst users, or distributed to users over time by a network’s development team, perhaps as a reward for participation within a blockchain network. 👇🏻👇🏻👇🏻
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Liza Jovan 🎩Ⓜ️💟✨
@lizajovan
📌 What are tokens used for? Crypto tokens are commonly used to power decentralised applications (dApps). Just like applications you might have on your phone, these are blockchain-based applications that can take many forms, from games and social media to DeFi platforms. Crypto tokens can also help to facilitate smart contracts. The potential utility of crypto tokens overall is endless, but exactly how specific tokens are used depends on the type of token itself. Given the vast choices, an investor should consider their intentions for buying tokens, this might depend on personal interests or investment strategy. For example, a crypto gaming company might issue security tokens that signify a stake in their company. Investors who are seeking to expose their portfolio to the blockchain gaming industry could buy these to gain ownership rights in the company, or to prove affiliation with the sector. 👇🏻👇🏻👇🏻
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Liza Jovan 🎩Ⓜ️💟✨
@lizajovan
Others, such as those wanting to play blockchain-based games themselves, might buy utility tokens for the more practical reason of using them in-game. 📌 Security vs utility tokens Security tokens are a type of investment instrument, considered a digital asset in their own right, that represent ownership rights. The value of a security token is influenced by the value of the external asset to which it is linked. For example, a security token might offer investors part ownership of a digital company. Utility tokens are different in that they are considered “user tokens”, designed to encourage interaction with a crypto network and to potentially unlock access to something within it. They are not intended to become a store of value, but are popular among crypto start-ups seeking early investment. 📌 The difference between coins and tokens It can be useful for investors to break down the key differences between coins and tokens, to better understand the value of each.
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Liza Jovan 🎩Ⓜ️💟✨
@lizajovan
📌 The different types of crypto coins and tokens As is the case with traditional financial instruments, many different types of crypto coins and tokens exist. 📎Stablecoins A stablecoin is a cryptocurrency with its value pegged to another asset’s price. For example, a stablecoin pegged to the US dollar should — in theory — always be valued at $1. Fiat-backed stablecoins tend to be the most popular type of stablecoin as they retain steady prices, meaning they can potentially help crypto investors to protect themselves from market volatility. 🔗 Altcoins 🔗 Meme coins 🔗 Coloured coins 📌 Final thoughts It is important for crypto investors to understand the key differences between coins and tokens to make the best possible investment decisions. While coins serve as digital currencies and independent units of value, tokens have a diverse range of utility and are built on pre-existing blockchain networks. Visit the eToro Academy to learn more about cryptocurrencies.
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