Home Finance Crypto Tokens VS Crypto Coins

Crypto Tokens VS Crypto Coins

by Lalithaa

A lot of new tokens are being introduced in the crypto world. Apart from just increasing the transactions, they are also resulting in the booking of much more profits than before. The way an investor wants to diversify his portfolio to minimize the risk, likewise the crypto exchange platforms are also diversifying their portfolio by the introduction of a new crypto token. There is this myth that crypto tokens are a risky affair in comparison to crypto coins. To explain it more clearly, crypto coins include- Bitcoin, Dogecoin, Stellar, Ethereum, and Litecoin, check this. Whereas Crypto tokens include-Uniswap, chainlink, Tether, etc. Crypto token is also used for investment and sold when their value rises.

You can only use crypto tokens for purchases, investments, storing value, and many other reasons. Crypto tokens are more like shares of a company, they are made by the crypto companies who want to raise money, and people who are interested in the company can buy the token of then crypto shares. A crypto token is like a digital asset existing on its own Blockchain.

To get more clarity on what is the difference between the two, listed below are a few points you can consider-

  • Crypto Coins are built on a blockchain, whereas Crypto tokens are built with the help of smart contracts on the existing Blockchain. This means that the token is more like crypto coins in case of transferring from one person to another, but the crypto tokens are using smart contracts, which cannot be used for purchasing goods and services.
  • Crypto Coins are basically very stringent because they have to be operated on a single blockchain which even causes inconvenience to its users. Whereas Crypto tokens are considered to be flexible and can be traded at your convenience.

There is a presence of a lot of crypto assets whose names have a token in them. Like

  • NFT’s- Non Fungible Tokens
  • Security Tokens
  • Governance Tokens
  • DeFi Tokens

There is a token named Tether, which is basically issued by the crypto company digitally with the aim of raising money. Tether is a type of debt that is repayable in the short term itself. 

Each of us possesses a token sometimes in life, for example you can sell your motorcycle to get a resale value of your asset, and similarly you can sell your contracts to earn a huge profit. 

To make things more clear, listed below are is the step by step procedure that you can follow when you want to start investing in Crypto tokens-

Step 1– 

First step is to select the crypto exchange platform

Crypto tokens are not traded on every Crypto exchange platform, so be certain to choose the crypto-exchange platform which allows you to trade in crypto tokens.

Step 2-

Second step involves Opening your trading accounts 

Now, you can open your trading account, which will take a maximum of 24 hours- because once you submit your documents, it takes 24 hours to get verified. You need to verify your account through their KYC process. 

Step 3– 

Fund the account.

Once you have made your account, you can now transfer money to your digital wallet from the bank account in order to start with the purchase and sale of the crypto-currencies.

Step 4

Start Trading.

Now you can easily start with buying and selling crypto tokens through your crypto exchange platform. Make sure, you must check their transaction fees before you choose an exchange. 

Step 5-Store your crypto tokens

Now you can store your crypto tokens securely because they have no regulatory body. You can use hot or cold wallet to store your tokens. 

Step 6

Have a strategy.

The most important step involves having a strategy of how to proceed further. At times the market gets highly volatile, so you have to act according to your risk tolerance.

Wrapping up

Both the terms-Crypto tokens and crypto coins are used interchangeably at times. But both of them are different from each other. While Crypto Coins came a lot prior to Crypto tokens, but still Crypto tokens are being increasingly used by the people. Crypto tokens in the coming future will be used more frequently than crypto coins, but as of now, investors are more interested in the crypto coins. 

 

You may also like