How are Crypto Tokens Different from Cryptocurrency?

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How are Crypto Tokens Different from Cryptocurrency

How Crypto Tokens Are Different from Cryptocurrency?

We have known cryptocurrency for more than a decade now, but we know that this market has no regulation as compared to the other monetary institutions. But this term has become quite common for all of us, the reason being the popularity that it has got due to some below-mentioned reasons:

  • That it is decentralized,
  • That both the terms, that is tokens and cryptocurrencies have got due to sharing deep compatibilities,
  • That token also has some physical value associated with it.

We all have heard about the term’s cryptocurrency and its different types in the digital space and further how the traders are dealing with it to earn the utmost profits in the digital space. But before investing in this field one must always speculate the risks that are involved, as it is equally important to have a thorough knowledge of each aspect of anything, especially where you are investing your hard-earned money and time. If you are interested in bitcoin trading, visit this platform for better insight.

Here in this article, I am going to give you all a deep insight as to the two famous terms of the digital world, which is crypto tokens and cryptocurrency itself.

Difference Between Both These Terms

We have seen that people use both the terms interchangeably and find them similar just because they are related to cryptocurrency. But both the terms have some basic differences to them and one must not confuse himself to take them as identical to each other. However, there is no debate about whether both these terms have a digital-physical value. One the one most fundamental difference is that crypto tokens do not possess an independent blockchain as they work on a blockchain that is in existence already whereas any cryptocurrency that comes into the digital world comes with a different and independent blockchain.

Cryptocurrency

As cryptocurrency has its birth before crypto tokens, we will first talk about cryptocurrency. Cryptocurrency such as Ethereum and bitcoin is based on a blockchain through which its basic functions are done. Any cryptocurrency runs through a protocol made to run its blockchain. Its usage has been seen in varied stages such as you can pay for any bill, whether it’s a fee or any other thing. But to make any transaction you have to pay a fee which is paid so that its network is kept safe. The coins so possessed by the investors can be used to pay for obtaining any services by the desired person. At a later stage, the coins that you hold can be further exchanged for the fiat currency of your respective nation. This means that the interest is another perk that you get on your invested money.

Crypto Tokens

Now talking about crypto tokens. Although this term has its ambit within the cryptocurrency sphere, yet there is some sole difference that it has got with that of a cryptocurrency. On comes compatibility. Both share a lot of it but we are here to discuss its differences. So we will get to them. Talking about the big cryptocurrencies like Bitcoin and Ethereum and many others, all these currencies exist on an independent blockchain but there are so many smaller currencies to the list that at the touchstone of this host currency carry out their work. As, bitcoin cash, LINK, COMP, DAI are so many currencies that are dependent upon the blockchain of these host currencies.

The Bottom Line

I hope my effort of differentiating between cryptocurrency and crypto token has succeeded and it will prevail as a good deal for future crypto endeavours.