What is difference between Coins and Tokens

In cryptocurrency world, alternative cryptocurrency coins, also called altcoins or simply coins are an alternative cryptocurrency to bitcoin. Bitcoin is the first cryptocurrency that was introduced to market. All other coins after that are known as altcoins or simply coins.

Cryptocurrency has two categories – Tokens and Coins.

Coins can also be categories into two groups – Bitcoin derived and native. All blockchains that are derived from original bitcoin are bitcoin derived. Rest of the blockchains are native blockchains.

Some of the Bitcoin derived coins are Litecoin, Dodgecoin, namecoin, and peercoin. Examples of coins that are based native blockchain are Ethereum, Ripple, Omni, NXT, and Wave.

A token is usually an additional asset that represent some value on top of an existing blockchain. Tokens can also be used as utility. Think of tokens as digital points that can be exchanged for some function. A blockchain based on bitcoin can have a utility token to use the platform.

For example, if there is a blockchain platform that allows you to verify a person’s background check, there can be a payment in terms of tokens for the verification work done by the blockchain. A users of the platform must acquire tokens before they can get verified.

The process of creation and use of tokens is called Tokenization.