What is the difference between a Coin and a Token?
Often people exchange the use of the terms “coin” and “tokens”. Some people will use either name to refer to all the digital assets currently available.
There is sizable differences between crypto coins and cryptocurrency tokens, so it is essential that you know the difference between them.
The definition of a digital coin is an asset that has it’s own blockchain like eCash. Similar to Bitcoin or Ether. Each of these coins exists on their own blockchain.
To emphasize the difference:-
- eCash operates and functions the eCash blockchain
- Bitcoin operates and functions on the Bitcoin blockchain
Transactions of digital coins can be made from one person to another (peer to peer). All the “coins” exist as data on a giant global database specifically on each blockchain. This blockchain keeps track of all the transactions and verified by computers around the world running the node software for that blockchain.
How are digital coins used?
Digital coins are more often than not used in the same way as a real-life coin is — as money. You can think of coins like Bitcoin and eCash just like the coins in your wallet or centre console of your car. Often, they don’t serve any other purpose than to be used as money.
These coins are used:
- To transfer money (you can give + receive value using them)
- As a store of value (they can be saved + later swapped for a useful item)
- As a unit of account (you can price goods or services in them)
What is a Token
Tokens often get called digital coins. However, this isn’t truly accurate. There is a major difference between the two. Tokens are created on existing blockchains (like Ethereum ETH or eCash XEC). In fact, thanks to the creation and facilitation of smart contracts, the most common blockchain token platform is Ethereum. Tokens that are built on the Ethereum platform are known as ERC-20 tokens.
There are some new networks which facilitate the creation of tokens on them such as NEO, Tron, and now eCash. While, mentioned above, tokens on the Ethereum platform are known as ERC-20 tokens, eCash uses tokens known as eTokens which can be made in seconds.
“Instantly create your own token with your own name, supply, decimal places, and icon — all for the low cost and high speed of a single eCash transaction (much less than $0.01).”
What is the purpose of tokens?
Tokens exist to be used within decentralized applications. When creator are making their token, they can decide how many units they want to make and where these new tokens will be sent when they are created. They will pay some of the native cryptocurrency on the blockchain that they are creating the token on and each transaction.
So is eCash a coin or a token?
eCash is a cryptocurrency coin, running on the eCash blockchain, that has the ability to create tokens that run on the eCash blockchain. So the answer is eCash is a coin, but it has the ability to create eTokens for use in smart contracts on the eCash blockchain.
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kilRcola
