The crypto-world can be confusing, starting from the underlying technology – blockchain – to unknown terms and abbreviations. The words “token” and “coin” are widely used… and misused. If you think they mean the same thing and are synonyms, you are wrong. In today’s blog post, we’ll talk about what coins and tokens are and why you shouldn’t use these two words interchangeably.
We call coins ‘cryptocurrencies’, ‘crypto’, and ‘alternative coins’ or ‘altcoins’. Speaking of altcoins. The only coin that can’t be called ‘altcoin’ is Bitcoin, the first cryptocurrency – or coin – ever. As all other coins derive from Bitcoin one way or another, they are called ‘altcoins’. So, altcoins simply refer to all other coins alternative to Bitcoin.
A token represents an asset or a utility that usually resides on top of another blockchain.
A token can represent any asset that is fungible and tradeable. For example, a commodity can be that asset.
A blockchain consists of a number of blocks, hence the term. Each block is a record of transactions of specific data, which can contain anything from cryptos to voting records to medical data. When one block is completed and can no longer be updated with new data, it is added to the chain and another, new block, is formed.
All the information on a blockchain is publicly available, being decentralized. This means that the information is stored on many computers distributed around the globe, and there’s no specific party or authority to control it.
If we look at the differences between coins and tokens, here are a few to be outlined.
XCM is a native token used in the CoinMetro ecosystem. All services on our platforms are paid for in XCM.
ERC-20 is a technical standard used for smart contracts on the Ethereum blockchain for implementing tokens. ERC actually stands for Ethereum Request for Comment, and 20 is the number that was assigned to this request.
Most of tokens issued on the Ethereum blockchain are ERC-20.
If you didn’t know, CoinMetro’s XCM is an ERC-20 token.
If you’re still reading this, we hope you’ll never confuse the definitions of coins and tokens again. If you have any questions or comments, please let us know in the section below! We’ll reply as soon as possible.
The CoinMetro Team