The Difference Between A Token And A Cryptocurrency

There’s no denying cryptocurrencies have boomed in recent years.

I mean that’s why you’re here, right?

Yet many still don’t get the difference between a cryptocurrency, and a token.

It’s about time we fixed that!

Cryptocurrencies

Cryptocurrencies use their own platform, and operate independently abiding by their own rule book.

They’re not built upon other platforms such as Ethereum!

You may have seen the term ‘altcoin’ thrown around. Many altcoins were built by modifying bitcoins source code. Even so they are still independent, as they modified it to produce their own respective blockchains.

Tokens

Tokens are built upon existing blockchains or cryptocurrencies.

In most cases, tokens are created to represent an asset or utility.

There’s no doubt that tokens are far easier to create than cryptocurrencies. Hence we see a plethora of them today, many being built upon the Ethereum blockchain.

There are two types of tokens available:

1. Utility Tokens

These are tokens which are not designed for the purposes of investment. Their purposes is for utility. Whether that’s for transacting, exchanging in order to access specific products or services.

Utility tokens don’t fall under regulatory scrutiny, which is a minefield to navigate.

2. Security Tokens.

Security tokens are considered investable assets! Hence, they are subject to regulations by the relevant body i.e. the SEC in the USA.

It’s a wide known fact that the howey test is used to verify if a token classifies as a security. An example of a securities token would be to represent ownership in a company, or stock.

List Of Cryptocurrencies & Tokens

You may notice these lists are different from many cryptocurrency tracking sites, reason being many sites combine both cryptocurrencies and tokens in their sole listings.

List Of Cryptocurrencies
List Of Tokens

To round up, you must understand that cryptocurrencies provide the foundation many tokens. On top of that, tokens have a wider range of functionality in which they can be used for.

Drop me a comment with your favorite cryptocurrency, and token!

Ravinder Deol
Ravinder helps people learn about Cryptocurrency & Blockchain Tech. He has created B21 Block along with awesome partners. Currently based in Valletta, Malta. He is originally from West Bromwich, UK.