A majority of people, this is inclusive of investors, assume that coin and token are indicative of the same thing. There is a pressing need to clarify the difference between coins and tokens. Though they are often viewed as being the same, they are not.
While both are theoretically crypto, they were never intended to be categorized as the same. The perception that coins and tokens are the same is a gross misconception.
Coins are created with encryption techniques that change in value over time. It is essentially a digital equivalent to money. They are just like the coins in your wallet, or in your piggy bank. Bitcoin, based on the blockchain, with its public and distributed ledger, is the most popular example.
These are coins based on Bitcoin’s original protocol, developed by Satoshi Nakomoto, and opened to the public. Examples of coins that are based on Bitcoin’s original protocol are Litecoin and Namecoin. An example of a coin that operates on the blockchain, developed specifically for it, is Monero.
The primary traits of coins are:
- They are connected to the public blockchain. Anybody can join and participate
- They can be sent, received, and mined
Below are a few use case scenarios with Bitcoin (BTC) as an illustrative example.
- BTC can be utilized to make payments for services all over the internet as well as in real-world business
- It can be stored for protracted periods of time with nothing happening to it; you can subsequently exchange it for something of equal value later
- The things that you purchase can be paid for in BTC as well
Tokens are digital assets
Tokens are digital assets issued by the project. These can be used as a method of payment within the project’s ecosystem, with similar functions as coins. This is why they are often confused with each other.
They are often referred to as coins, but it is vital to understand that they are not! Tokens are developed on blockchains that already exist. Thanks to the development and facilitation of smart contracts. The most typical blockchain token platform is Ethereum. Tokens that are developed on this specific platform are known as ERC-20 tokens.
There are several other platforms such as Stratis, Waves, Lisk, and Neo. The NEO platform, for example, utilizes tokens that are referred to as NEP-5 tokens.
Developing your own customized token is simple, on any of these specified platforms.
Tokens vs Coins: Their Purpose
Most tokens are intended to be utilized with decentralized applications or dApps. When developers are making their proprietary token, they determine the number of units they want to make and where these tokens will be sent when they are created. At this stage, the developers will pay part of the native crypto on the blockchain they are developing the token on.
After development, tokens are typically used to activate features of the app that they were developed for.
For instance, Musiccoin is a token that enables users to access different features of the Musiccoin platform. This could be viewing a music video or streaming a song. Other tokens are developed to be indicative of a physical thing. If you wanted to sell a real estate property using a smart contract, you can’t exactly put property physically up on that specific contract, can you? So instead, you develop a token that is representative of that real estate property.
WePower (WPR) is another good instance of a token that is representative of a physical thing. It denotes in electricity. The WePower is a dApp project that enables users to purchase and sell electricity on the blockchain, utilizing smart contracts. Its token, WPR, indicates a specific amount of energy.
Advantages of having your own cryptocurrency
If your project or startup requires its own blockchain, you need to develop your proprietary crypto to incentivize the nodes that contribute to their processing power. With regards to blockchain, analysts predict a rich future and an increasing list of markets/industries where blockchain will have a disruptive effect on the norm, greatly benefiting adopters.
Your decision to develop your proprietary crypto fetches you a set of powerful marketing tools and benefits that will serve as your unique selling point.
The following are the benefits that you can reap:
- Eliminating fraud risks
- Anonymous transactions
- Saving operating costs
- Providing immediate transactions
- Immediate availability of clientele
- Fund security
How to develop a blockchain?
- Awareness of the use case
- Opt for a consensus mechanism
- Choose a blockchain platform
- Develop the nodes
- Determine your blockchain’s internal architecture
- Look after APIs for tasks that are carried out within the blockchain
- Legalize your crypto
- Create intuitive/comprehensive admin/user interface
Develop and improve your blockchain
How can you boost your blockchain by leveraging other disruptive technologies? These provide an undeniable boost to your blockchain. Developing a blockchain is the only way through which you can exercise comprehensive control over it.
By developing your proprietary alt-coin from the get-go, you will be able to construct one-of-a-kind features along with the capability to determine and establish its parameters.
-> Several options exist for customization of your coin, in order to make it unique
-> You can determine if you want to utilize miners/ minters dependent on the earnings going by proof-of-work or proof-of-stake rewards
Creating a fork is an alternative to developing your own blockchain.
Expertise is required to develop your own blockchain. In a situation where there is a dearth of these specific skills, bitcoin forks are a viable solution.
Forking in crypto
In layman’s terminology, a blockchain fork refers to a software update. Participants in the blockchain run the same software and its vital that they execute the same version in order to access the collaborative ledger to detect transactions and ensure the safety of the network.
Hard and soft forks differentiated
Forks are divisible into hard forks and soft. Hard forks need 90% to 95% of the nodes in order to update their software —– the system has stopped accepting nodes that are using non-updated versions.
Soft forks don’t demand as much. A majority of the nodes are needed to update the software, and those who are executing a prior version can keep operating.
How to develop a bitcoin fork?
- Utilize a fork coin generator
If you lack programming know-how, services such as ForkGen might be the ideal solution for you. ForkGen is an automated fork coin generator where any individual can develop a unique Bitcoin offshoot by modifying some parameters and rules.
- Do it yourself
Or you could develop it yourself if you have no reservations with dirtying your hands.
-> Identify Bitcoin code on GitHub, compile and download it on your computer
-> After the programming portion commences, you’ll have to reconfigure the coding, and utilize it on your customization.
-> Upload the code back up on GitHub
-> Furnish website details and some type of documentation (usually a white paper)