What is a token? What is the difference between a coin and a token?

There are many terms that are used in the digital currency market today. Some traders confuse these terms and sometimes use them interchangeably. For example, many people do not know the exact meaning of what a token is and do not know the difference between a coin and a token. Token is actually a slang term used among Iranian traders for digital currencies, which actually has a completely different meaning. But digital currencies are actually coins that are used in many issues besides buying and selling. In this article, we are going to explain what a coin is and how it differs from a coin.

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What is a token?

Token is one of the digital assets that most people confuse with coins. Token is a term that existed long before digital currencies on the Internet and in the world. Vokens are actually tokens that different platforms give to their users in exchange for performing a series of activities. Among the most routine ones, we can mention Roblox game token and cryptominer game token called Hora. In free crypto games, these tokens are given to players to trade them and buy the items they need. Also, people can start making NFTs by using some of the tokens in BaZ. In general, a token is another type of digital asset that does not have its own blockchain; But it supports smart contracts.

As you know, smart contracts give tokens in-app usability, hence they perform better than some coins. Like digital currencies, tokens are divided into non-fungible and fungible. Non-equivalent tokens or NFTs are one of the most important digital assets that have the most demand after digital currencies. Among the most famous NFTs, we can mention cryptopunks, some of which are worth more than Bitcoin. If you want to know about cryptopunks, read the article What is cryptopunk? You can see the price of tokens on the CoinmarketCap website and buy or create a token through one of the Rarible or OpenSea platforms.

Tokens are also included in another category of digital currencies, which are called stable coins. Among the most famous stablecoins are Tether, Forex, etc., which have a fixed value and do not change.

Read more: What is Rarable Platform?

What is a coin?

Coin is the term used in the cryptocurrency market for cryptocurrencies, and Bitcoin is the most valuable coin at the moment. Coins are implemented on blockchain technology and some of them are the property of their own network. For example, Ethereum, Cardano, and Tron are digital currencies that have their own blockchain network. If you want to learn more about the low-cost Tron network, read the article What is Tron digital currency? The mentioned coins each have a high value and are bought and sold in the cryptocurrency market. But one thing that is true about all of them is that it lowers the fees within the proprietary blockchain network. For example, Tron digital currency is used to reduce Tron network fees, which is one of the cheapest blockchain networks.

Unlike tokens, coins do not support smart contracts, but they have more interesting functions. Bitcoin and Ethereum can be mentioned among the famous coins of the digital currency market. Coins are used in the field of DeFi 2 and 1, also by using them, the security of the network can be increased. If you want to get acquainted with DiFi 2, the new generation of DiFi 1, read the article What is DiFi 2.

What is the difference between a coin and a token?

Now that we have introduced the concept of coin and token up to this part of the article, it is better to get acquainted with the difference between the two. There is a big difference between two digital assets, coins and tokens, and the main difference is whether or not they have a dedicated blockchain network. Coins are digital assets that are implemented on blockchain networks, and some of them are the property of a dedicated blockchain network. But unlike coins, tokens do not have a dedicated blockchain, but they support smart contracts. Tokens are implemented on the blockchain network, but do not have their own blockchain. In-app costs cannot be paid using tokens and are only used to purchase in-game items.

Of course, gamers are very skilled in converting tokens to coins, they do this by acquiring tokens in the game and converting them to another digital currency. Practically, gamers earn a lot of money from free crypto games with tidable tokens to coins. Maybe the question arises where to get the token? As we mentioned earlier in the article What is Token, from the Coin Market Cap website. By visiting this website and finding the token they want, traders can easily find out the price of the token and how to buy the token. Traders and gamers can buy these assets from many exchanges.

Kocoin exchange is the most famous exchange among Iranians, if you are not familiar with how to buy from this exchange, read the complete training article of Kocoin exchange. Another difference between coins and tokens is the issue of token and coin mining. To encourage more miners to mine more, coins are awarded to the blockchain as a reward after each block is broken. Also, by using coins, traders can be involved in staking operations and increasing network security.

Tokens in turn have a lot of value and are used in many blockchain networks. The most unique tokens in the market are cryptopunks, which we mentioned in the What is a token section. Also, the Tether token, which is one of the most famous assets, is widely used in converting tokens to coins and digital currencies.

The difference between coin and token

After you understand the difference between cryptocurrency and token, we are going to introduce you to the difference between making a coin and a token. Coins are much more complex in nature than tokens and are fungible. This type of digital asset can be exchanged for another asset. Coins are created through a coding process that requires a high level of knowledge about how to code and create coins. But this issue is a little different in making tokens, if you are familiar with how NFTs are made, you will understand this very well. Because to make NFT, it is enough to convert one of your works of art into NFT in one of the NFT making platforms such as Rariable or OpenC.

If you are not familiar with the top NFT development platform, read the article What is OpenC Platform? Of course, it also has a coding section; Smart contracts are implemented through coding, the coding part of which is almost easier than making coins. Therefore, the difference between making a coin and a token is more in its coding part and that the token does not need a blockchain.

Conclusion

Digital currencies are a large and complex market with different terms that may be confusing for most people. One of the terms that traders often mistakenly use interchangeably is the meaning of token and coin. These two concepts and meanings are different from each other, which we defined at the beginning of the article What is Token? Tokens were created and developed through smart contracts, but coins through blockchain technology. In this article, we tried to introduce you to the meaning of coin and token and also explain the difference between cryptocurrency and token.