10 July 2020
Cryptoworld is a bundle of confusing terminologies and with every day a new terminology is being added. Many terms like cryptocurrency, altcoin, and tokens are often considered as same and used synonymously. However, all of them carry different technical definitions.
In the digital world, cryptocurrency is the main category while coins and tokens are the subcategories
Cryptocurrency: It is the standard currency used solely for sending and receiving payment on the blockchain.
Altcoins: Any coin other then bitcoin is termed as Altcoin. They are considered as substitutes of bitcoins for overcoming some flaws of Bitcoin. However, none of the coins have as gain popularity as Bitcoin. For eg. Litecoin, Ethereum, Namecoin, etc.
Tokens: Tokens represent assets issued by blockchain start-ups through ICO to raise the capital required for creating a new coin, app or service. Different types of tokens are issued every day and based on their functionality they are classified as:
Utility tokens: They are also known as application token which forms access to people inside the project in the future after the purchase. For eg. Basic Attention Token (BAT).
Asset tokens: These tokens help to authenticate a person’s identity electronically with the stored personal information and serve as stand-ins for the companies during the entitlements to the dividends or interest payments. For eg. DAO
Currency tokens: Payment or currency token are solely used as a source of payment of goods and services. They represent the purest form of cryptocurrency residing on its own blockchain. Currency tokens are designed to enable smooth purchases, sales, and other financial transactions safely. Along with these, currency tokens perform functions similar to the well-established currencies like the U.S. dollar or Euro.
Examples of Payment tokens:
Payment tokens will soon be dominating the payment system as the given value is always maintained as compared to the traditional payment methods. Because of this, the number of businesses accepting this tokens as a means of payment method for various goods and services is also increasing day-by-day.