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Crypto-Tokens

Tokens by default have a few benefits in contrast to coins:

Tokens are often built on an already established blockchain. This removes the effort of having to build its own community of nodes, miners, and dedicated users to put forth effort to ensure the security of the network. For example, a token built on the Ethereum blockchain already has a dedicated community of miners who will ensure transactions are processed smoothly even regarding the transfer of tokens.

This is where a connection can often be made, as the Native blockchains Coin is the “gas” that will be used when performing transactions with the underlying token. In other words, If I were to send 20 DRP Tokens from my Ethereum wallet to your Ethereum wallet, the transaction fee would be paid in ETH, not DRP.

Some attributes of a token include:

  • It’s codependency to an already established Coin’s Blockchain

  • The ability for them to serve a unique, yet immutable purpose with few limitations.

In practice, the line between coins and tokens is not clear and sharp. Both are used to transfer value, as a means of payment, in a similar way to that both USD and shares are used to reward people for work. As the technology evolves, there’s no doubt that the classifications won’t follow, but in the current time most people tend to agree that: coin = cash, token = everything else.


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