THECRYPTO.WATCH – The difference between coins and crypto tokens is an interesting thing to discuss. Because, many people can not differentiate properly.
Every trader must understand cryptocurrencies as a whole, including the difference between coin and crypto token. After understanding it, traders can determine how to build a good crypto portfolio.
2 Differences Coin and Token
There are so many terms in cryptocurrencies that traders must understand too. The emergence of the difference between coin and crypto token for people who are new to the world of digital currency is indeed confusing. Consider the following differences:
Mechanisms
Although they have similarities, tokens and coins are two different things. To help you tell the difference, the first thing that can help is from the mining process.
Coin is a crypto asset that has its own blockchain technology, for example, Binance Coin. In addition, coins also act as currency that can be used for transactions and storage. However, the difference is in the form of digital money.
As for the tokens, they are on another blockchain network. For example, TCW token that uses blockchain from BNB.
The Process of Getting It
The formation of this coin comes from the mining process, with proof of work and proof of stake. These two mechanisms each trader can get their own coins.
As for tokens, they use decentralized applications or commonly called DApps. This decentralized application uses tokens that are easier to develop.
Such as the emergence of decentralized finance and tokens that exchanges cannot. Basically, a token is a representation of an asset that has utility. In TCW token, you can find it in a running project.
Tokens can also function as a medium of exchange or payment within a project. Besides that, it has the same function as a coin, which is that it can be traded.
In general, if the price of crypto coins is still high, with a high capitalization as well. Meanwhile, tokens have a relatively cheaper price.
You can also assess the effect of coin price movements on a token formed on it. The main thing is the trading volume . If the coin price drops automatically, it affects the trading volume of the token.
Before starting trading, it is better to understand the difference between coin and crypto token so that it is easy to calculate profits. And can build a portfolio evenly that refers to market capitalization.
