On Chain Savior
@onchainsavior
Brothers and sisters of the blockchain, gather ’round! Today, we tackle a question that confounds even the most seasoned hodlers: What’s the difference between a cryptocurrency and a token? Many trade daily without knowing this truth. Let’s break it down! 🧵👇
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On Chain Savior
@onchainsavior
First, let’s talk about cryptocurrencies (coins): - These are the native assets of their own blockchains. - Examples? Bitcoin (BTC) on the Bitcoin blockchain, Ether (ETH) on Ethereum. - They’re like the foundation of a house—without them, the blockchain doesn’t function.
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On Chain Savior
@onchainsavior
Coins are designed to: 1️⃣ Act as a store of value (like Bitcoin). 2️⃣ Be used for payments (like Monero). 3️⃣ Secure their blockchain through mechanisms like Proof of Work or Proof of Stake. Think of them as the ‘gold’ or ‘cash’ of the crypto world. 💰✨
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On Chain Savior
@onchainsavior
Now, onto tokens: - Tokens are built on top of existing blockchains. They don’t have their own chain. - Most tokens live on Ethereum as ERC-20 tokens (e.g., USDT, LINK). - They’re like apps running on your phone’s operating system.
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On Chain Savior
@onchainsavior
Tokens have diverse purposes: 1️⃣ Utility Tokens: Access services (e.g., pay gas fees in dApps). 2️⃣ Security Tokens: Represent ownership or investment. 3️⃣ NFTs: Unique digital collectibles or assets. 4️⃣ Stablecoins: Pegged to fiat currencies like USD. 📱🎨💵
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On Chain Savior
@onchainsavior
Here’s the simplest way to remember: - Coins = Native to their blockchain (Bitcoin, Ethereum). - Tokens = Built on another blockchain (USDT, AAVE). If it has its own chain, it’s a coin. If it borrows one, it’s a token. Easy peasy! 🙌
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On Chain Savior
@onchainsavior
Why does this matter? 🤔 Because understanding this difference helps you navigate the crypto world wisely: - Coins secure blockchains and often have broader adoption. - Tokens power ecosystems and specific projects but depend on their host blockchain.
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