Token versus coin
The title of this chapter is misleading. It has been made misleading on purpose. This has been chosen to make you realize the subtle difference between a cryptocurrency and a token in the perspective of Ethereum. When you explore the web to gain knowledge about cryptocurrency, you will observe that the terms cryptocurrency, coins, and tokens are often used interchangeably.
Figure 8.1 represents a classification that brings out the subtle differences between them:
Figure 8.1: Token versus coin
In simple words, the following four points summarize the difference between coins and tokens:
- Coins are separate currencies on their own blockchain, while tokens are mainly based on a single blockchain variant.
- Coins generally have a limited functionality, store-of-value, while tokens can store a complex, multi-faceted level of values.
- Coins are mostly generated by mining a blockchain, while tokens are generated by executing smart contracts on the blockchain.
- So, when we say cryptocurrency...