What’s the Difference Between Cryptocurrency and Crypto Token?
The cryptocurrency market is growing rapidly every year. Started in 2009 with just one cryptocurrency, today there are more than 2,000 to choose from. So how does someone know which one will help you get the best returns on investment?
Defining Cryptocurrency
The terms ‘cryptocurrency’ and ‘crypto token’ are often used interchangeably, but there is an important difference between the two. This article will outline what that difference is, as well as discuss some other key aspects of crypto tokens.
A cryptocurrency is a type of digital currency that uses encryption techniques for security and anti-counterfeiting measures. A cryptocurrency is essentially a virtual currency, designed to be self-contained for its value with no need for banks to move and store the money. Cryptocurrencies are classified as a subset of digital currencies and are also classified as a subset of alternative currencies and virtual currencies.
Cryptotoken and Token Protocol
On the other hand, cryptotoken refers to a representation of a particular asset or utility that is usually found on another blockchain. The defining characteristic of all tokens is the ERC20 standard built on Ethereum technology.
This token protocol allows for the building of decentralized applications (DApps) that are executed on the blockchain and governed by smart contracts. The value of these tokens comes from the underlying value of the DApp or business that issues them. It is important to understand the difference between cryptocurrencies and crypto-tokens.
Understanding how each one works, their advantages, and disadvantages will help you make an informed decision on which one you want to invest in. These factors are also necessary when determining which one should be integrated into your business model.
