Are Crypto Tokens and Coins the Same? Key Differences.

Cryptocurrency has emerged and become increasingly popular as a result of increased digitalization and technology, which many people have benefited from. Almost everyone has, at some point or the other throughout their cryptocurrency adventure, mistaken crypto tokens for crypto coins. Experts have long maintained that while all coins are tokens, not all tokens are coins. This is analogous to comparing investors and traders: all traders invest, but not all investors trade — although most cryptocurrency users often possess both coins and tokens.

Basically, the major distinction between coins and tokens is that crypto coins are the native asset of a Blockchain like Bitcoin or Ethereum, while platforms and apps that are developed on top of an existing Blockchain create crypto tokens.

It doesn’t end there; we’ll go over many more factors that differentiate coins and tokens, as well as their respective functions–so you’ll know what you’re talking about anytime you make a reference.

What is a Crypto Coin?

Coins are cryptocurrencies that run on a blockchain network while also possessing the qualities of a traditional currency. They are primarily meant to store value and function as a means of exchange.

These forms of cryptocurrency, like Bitcoin and Ethereum, operate independently and on their native blockchain and are often bootstrapped from scratch–built specifically to accomplish a certain purpose. For instance, Bitcoin functions as a secure, cutting-out-the-middleman, and censorship-resistant store of value.

Coins often find cues from traditional systems or other existing cryptocurrencies, combining them into a unique network that serves a specific purpose.

What are Coins used for?

The world’s first and largest cryptocurrency, Bitcoin, was created to replace the traditional financial system, while also taking away the control of government and central authorities from single-handedly taking charge of people’s funds.

The following are the primary uses of crypto coins;

1. Online and Offline Purchases of Goods and Services
2. Store of Value
3. Cheaper and Faster Transactions
4. Peer-to-Peer Transfers
5. Transaction Fees

Examples of Crypto Coins

Bitcoin (BTC):

Bitcoin (BTC) is the world’s most valuable cryptocurrency in terms of market capitalization. Satoshi Nakamoto developed BTC in 2009 as a means of exchange, and it remains the most popular crypto coin in the world.

Ethereum (ETH):

The Ether coin is the world’s second-largest cryptocurrency coin after bitcoin. Ethereum operates as a decentralized, open-source blockchain with smart contract functionality that enables trustless peer-to-peer transactions.

Litecoin (LTC):

Created in October 2011, Litecoin was among the earliest coins that were inspired by Bitcoin. It was developed to enable quicker and cheaper transactions.

Solana (Sol):

Solana is a cryptocurrency platform whose native coin also offers a smart contract functionality. It’s usually dubbed the “Ethereum killer” as it can handle more transactions per second and offer cheaper transaction fees.

Can Coins Be Mined?

Coins are always mined or minted into circulation in several ways to protect their networks as they reside on their native blockchain network. There are generally two methods for mining coins.

The first mechanism is the Proof of Work (PoW) consensus mechanism, which is utilized by Bitcoin and many other coins. This process permits the issuing of additional bitcoins into circulation while simultaneously guaranteeing the network’s security.

The second technique is the Proof of Stake (PoS) mechanism, a more contemporary method for generating coins. It requires less energy and is simpler to do. Cardano and Ethereum are the two most popular coins that employ this protocol.

The following are a few more procedures for mining coins besides PoW and PoS;

1. Delegated Proof of Stake (DPoS)
2. Proof of Activity (PoA)
3. Proof of History (PoH)
4. Proof of Importance (PoI)
5. Proof of Authority (PoA)
6. Proof of Capacity (PoC)
7. Proof of Elapsed Time (PoET)

What is a Crypto Token?

Crypto tokens are built on blockchain technology–similar to crypto coins–but are not native to a blockchain. Instead, they are based on top of a third-party blockchain network, frequently leveraging smart contracts to perform a variety of functions.

A crypto token can indicate several things, such as a stake in a DAO, a digital item or non-fungible token (NFT), or even an actual object. Crypto tokens are like coins in that they may be purchased, sold, and exchanged, but they aren’t often utilized as a means of exchange.

Unlike crypto coins, tokens are not mined with any of the above-mentioned consensus mechanisms. Rather, they are often distributed automatically by the developers, using pre-defined rules secured with “smart contracts.” Each blockchain network uses different protocols for its smart contracts. For instance, Ethereum majorly uses ERC-20, while the Binance Smart chain uses BEP-20.

Types of Cryptocurrency Tokens

There are two types of cryptocurrency tokens, namely “Utility tokens” and “Security tokens.”

Utility Tokens:

Simply put, utility tokens are often created to fulfil a particular function within the ecosystem of a platform and are typically issued to investors during the initial coin offering (ICO) phase to build interest in the product or service. Utility tokens could provide investors with special benefits within a certain ecosystem.

Security Tokens:

Security tokens are decentralized digital shares that represent ownership rights in an issuing firm. These digital assets are used to represent ownership rights or asset value of a particular firm that has been converted to a blockchain token.

However, the major difference between security and utility crypto tokens is that a utility token may give you access to a firm’s product or service, whereas a security token might purchase you a share in the company itself.

Some Examples of Cryptocurrency Tokens

The following are some popular examples of crypto tokens, out of the thousands of tokens available in the market today.

Shiba Inu (SHIB):

SHIB is an Ethereum blockchain-based cryptocurrency with a dog motif. Shiba Inu, which was created in 2020, has recently gained popularity, earning the moniker “Dogecoin killer.”

Mr Mint (MNT):

MNT is the first cryptocurrency token in history to be powered by real-world cryptocurrency mining. The Mr. Mint token, based on the Binance Smart chain (BSC), is intended to make it extremely easy for people to invest in crypto mining without any experience or expensive equipment.

Pancakeswap (CAKE):

CAKE is the native of PancakeSwap, a decentralized exchange developed to facilitate the trading of BEP-20 tokens. The CAKE token may be utilized in various ways on the PancakeSwap platform, including Yield Farming, Staking, Voting on Governance Proposals, etc.

Decentraland (MANA):

MANA is the native cryptocurrency token of the popular NFT marketplace–Decentraland. MANA is an Ethereum-based (ERC20) token that, among other things, can be used to pay for in-world items and services, as well as LAND parcels.

How Can Crypto Tokens Become Coins?

Once a token builds its own native blockchain network, it essentially turns into a coin. A token project that already exists may easily create its own blockchain and migrate its tokens to the new, purpose-built blockchain. If this migration is successful, the token will function as a coin and may allow for the creation of more tokens on its network.

For instance, Binance’s BNB was initially released in 2017 on the Ethereum blockchain, but in 2019 it migrated to Binance’s native blockchain, known as Binance Smart Chain or BSC (called BNB Chain).

The biggest benefits that come with a token becoming a coin

There are numerous benefits that come with a crypto token becoming a coin after developing its blockchain network.

1. It becomes a coin with a native blockchain that can have its own set of rules and desired consensus mechanism
2. It accommodates other tokens to build their projects on its blockchain. This increases the adoption of the coin and may eventually serve as a revenue stream for it.
3. It can be used as a transaction fee (like gas) for other tokens built on its network. For instance, all Ethereum-based tokens, either fungible or non-fungible, employ the Ether token as a gas fee.
4. It allows actual firms and entities to build diverse products and services for real-world uses on the blockchain network

Closing Thoughts

The choice to buy coins or tokens greatly depends on the holder’s intentions, since each offers unique advantages that might they may find interesting. However, we hope that the information in this post has helped you grasp the concept in depth and that you are no longer mistaking tokens for coins or coins for tokens.

To know more about the Mr Mint project, log on to www.mrmint.io

Important Dates:

Private Sale: 2nd April — 15th May 2022 [CLOSED]
Pre Sale: 16th May — 30th June 2022 [CLOSED]
Public Sale: 1st July — 31st December 2022 [LIVE]

Join us on social:

Telegram: Mr Mint_Official Ann
Twitter: @MrMint_Official
Instagram: @MrMint_Official
Facebook: @officialmrmint
YouTube: Mr Mint [MNT]