The cryptocurrencies world has created a wide vocabulary that not everyone knows. This way, differences between conceptos that seem like the same have been established. In the crypto world, there are many that still use the concepts of token and crypto as synonyms, when they’re not. That’s why in the following article we’ve decided to explain the differences between a token and a crypto. We hope it helps.
First, the BBVA bank difnes tokens in the following way:
They’re a value unity that an organization creates to govern its business model and give more power to its users to interact with their products, at the same time that facilitates the distribution and benefits sharing among all their shareholders.
This way, we can say that tokens are a value unit (in this case digital). In technologic terms, a token’s a public or private alphanumeric chain. These act as tickets, giving this way the capacity to send information through the Blockchain to their owners. These describes similar elements to cryptocurrencies, but has bigger uses than just as payment methods.
These are created over an already existing cryptos’ protocol, and are issued by FinTech ventures or enterprises that work in the deveolpment of apps with the Blockchain. The common use of these tokens like ICOs so the entrepeneurs can get a collective financing. We can distinguish between to types of token: safety and utility.
Safety tokens are those that give its owners the right to claim their investment interests. Utility tokens are those through which its owners manage to access to services that a platform based on the Blockchain’s offering.
As we’ve said before, cryptos are virtual currencies that use a digital encryption for its operations. This way, money transactions can be made without needing a third party, as a Bank or the State. This way, the use of cryptography to maintain a safe and totally decentralized economy, far away from state or institutional control.
These are known because of their almost impossible to falsify, being a decentralized currencies and and a money transaction methoed that’s faster and totally anonymous.
Now well, we can say that all crypto is a token, because its function enters among a tokens’ particularities. Nonetheless, not all tokens are cryptos.
This way, its initial difference is that tokens are created from the blockchain of an already existing cryptocurrency. Thus, its creation is much faster, since codes don’t need to be modified. Another difference’s that tokens not have a finite number of issued currencies, differently to cryptos that do have a finite number.
Lastly, cryptocurrencies have a value and price of their own, created by the usability that they have and the offer and demand. Tokens don’t have this characteristic, and that’s why they’re dependent of the project or app for which they were created.
Did you like this article about the differences between tokens and cryptos? Share it!