Crypto Terminology: Coin or Token?

In cryptocurrency, there are all kinds of words and terminologies which are thrown around regularly. For those of us who are new to cryptocurrency, the massive and unique vocabulary that is associated with crypto can be quite daunting at first. In this piece, we will take a moment to look at the different words and terminologies that commonly come up in crypto conversations, so that our newest users are up to speed. This article will focus on the differences and similarities between coins and tokens.

Coins

The most common mix-up in cryptocurrency terminology is the difference between a coin and a token. Nearly everyone in crypto has confused the two at one point or another, along their cryptocurrency journey. This is because both coins and tokens are very much alike. They each represent value and are capable of processing payments. You can even swap coins for tokens and vice versa.

The biggest difference between the two is that coins operate on their own native platform. This means coins are independent from any other platform, when it comes to exchanging them, holding them, or using them to buy goods and services. Bitcoin is a great example of what defines a coin because it was the first ever cryptocurrency that gave the world a true definition of what a digital coin is.

Tokens

Tokens are digital assets which are created on, and exist on platforms which already have a native digital currency, or coin. Anyone who creates a token is relying on the platform in which it was created on. For companies and organizations that would benefit from having their own cryptocurrency, but would rather not develop and maintain their own blockchain; creating a token can be a great alternative.

Because tokens exist on the platforms of other cryptocurrencies, their processing and validation is handled by the platform they were created on. Cryptocurrency platforms that allow for the creation or “minting” of tokens come with a fee; often called a “gas” fee. Although there are a variety of platforms which allow for the creation of new tokens, it requires the expenditure of some of the platform’s native digital assets. This is often referred to as a “gas” fee.

Tokens Becoming Coins

Tokens can sometimes become coins if they are performing well enough. This has happened with both Binance Coin (BNB) as well as Crypto.com Coin (CRO). For this to happen, the development team behind a token needs to create a standalone blockchain, that can match the value of the original tokens, with the coin on the new network. The old tokens are then exchanged for the new coins. Essentially, the value of each token is moved to its coin counterpart on the new blockchain.

Conclusion

Regardless of whether a cryptocurrency asset is considered a coin or a token, they both have the same advantageous investment qualities, when you’re using Killer Whale! Be sure to check out our Killer Whale Products page, to see what Killer Whale Signals and Strategies are right for you!

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