Coin? Token? What are they?
When someone talks about crypto coins or tokens you might think that they’re similar but they have many differences.
How they work:
Coin:To start off, crypto coins are a type of cryptocurrency that have their own unique blockchain. An example of some of the largest coins include Bitcoin, Ethereum and Litecoin. Each of them run on their own programming. These coins can be transacted from entity to entity. These “coins” are not physical they’re digital and exist on a database/blockchain. Every transaction a coin makes is recorded on the blockchain. Once the transaction is completed, it is permanently recorded, ensuring security and transparency.
Pros: As the creator of the blockchain you have total control over the rules and how to manage it. They might be seen with more value because of their distinctive project.
Cons: The main problem with making a coin are the costs, making a coin has a substantial cost compared to making a token. Another con is that you have to individually manage security and lastly, it takes time to make a functional safe working blockchain.
Token: Secondly, tokens are another type of cryptocurrency already built on an existing network. The most common blockchain token platform is Ethereum, these are also called ERC-20 tokens. Anyone can make their own token on their platforms.
How to make: To make a crypto token takes little experience. For example if you want to make a Ethereum token you need to spend some ETH. Its costs varies but is generally low.
Pros: Firstly, tokens are easier to make, they don’t require you to make your own blockchain which can save a lot of time. Another pro is that you also save money while developing it. There’s no need to invest in security or a new structure for a unique blockchain. Tokens can use existing blockchain tools like wallets, and exchanges to use that as a foundation.
Cons: Since the tokens rely on the blockchain, if the network cant support a surge in transactions or if there is a problem with it, then it can affect your token. Since you don’t own the blockchain it’ll be harder to customize rules. Lower authority.
Finding out whether you want to create a crypto coin or token depends on your project’s needs. Before deciding, consider factors like development resources, desired control, scalability, and the intended use case of your cryptocurrency. Once you’ve developed a plan, you’ll be ready to make the right choice.
