The long-lived debate between altcoin and token is making rounds among the crypto community. Despite being quite simpler terms, a number of crypto investors fail to distinguish between altcoin and token. As compared to other financial subjects, cryptocurrency is quite complicated to understand, but only if you are not familiar with its basics.
While learning this art of making money, people often neglect the simpler terms and jump on to explore the revolutionary blockchain technology- the reason for the large Bitcoin evolution. As a result, they miss upon the fundamental learnings of cryptocurrency and end up losing deals just for not knowing the difference between an altcoin and a token.
Both of these terms are more than often used interchangeably, which becomes a reason for inventors to get confused. For example, we all use cryptocurrencies as crypto tokens while addressing this digital asset, but that’s not the case.
For someone who doesn’t know the basics of cryptocurrency and is trying to explore it, this guide is for you. Understanding the right difference between altcoin and tokens is the very first lesson one needs to know in order to proceed further.
Once you’ve accomplished these fundamental terms of cryptocurrency, understanding the decentralized blockchain platform will be a piece of cake. Without further ado, let’s get started. To make it simple, we’ll walk you through all the common terms related to cryptocurrency and their short definitions. Here we go!
What are cryptocurrencies?
One of the most famous digital assets in today’s era that has gained quite a lot of traction in the financial world. Cryptocurrency is a famous digital currency that is secure, encrypted, and effective than other tradable assets present yet.
Today, more than 4000 cryptocurrencies are being used at quite a larger level, making money for people. The first cryptocurrency was bitcoin, launched in 2009 by Satoshi Nakamoto. Surpassing all the cryptocurrencies, Bitcoin has recently soared up to a trillion-dollar market capitalization because of its high volatility and immeasurable fame.
Nearly all cryptocurrencies, including bitcoin, work on a decentralized peer-to-peer blockchain platform. Having said that, let’s now know what altcoin is.
What is an Altcoin?
To put it simply, an altcoin is every other cryptocurrency that has been launched yet except the bitcoin. Altcoins have many properties that resemble bitcoin to a great extent, but these attributes are not enough to make altcoins as famous and expensive as the trillion-dollar bitcoin.
Like bitcoin, many altcoins also share the decentralized blockchain platform to ensure smooth, efficient, and hassle-less use. It won’t be wrong to say that altcoins are the monomers of bitcoin as nearly all of them are inspired by the white paper on the mechanism on which bitcoin works. It has also been observed that altcoins experience price fluctuations on many factors, including Bitcoin’s price value and market capitalization.
According to research, approximately 40% of the total cryptocurrency market ratio is filled by altcoins besides stable coins, security tokens, crypto tokens, etc. As per crypto investors, Altcoins are a cheap and somewhat smart alternative to bitcoin, which follows on a similar framework and fills the lack faced while using Bitcoin.
Ethereum is the second-largest cryptocurrency or an altcoin that has spiked up to 295,84 Billion and has predictions to overcome bitcoin in one way or another.
What are crypto tokens?
You have probably owned tokens for winning the lottery, games, or participating in specific shows. Crypto tokens are basically a tangible asset that works on their unique blockchains. Compared to Altcoins, Crypto tokens are much easier to use, cheap to store, and hassle less to manage.
In addition, there are hundreds of profitable ways through which you can use crypto tokens and earn good profits. Crowdfunding is one such major use of crypto tokens that allow users to facilitate transactions using blockchain or any other platform.
Unlike altcoin, there’s a certain way of acquiring these crypto tokens once they are successfully created by tech-savvy crypto users. Usually, Crypto tokens allow the involvement of the ICO process, which stands for initial coin offering. Through this, the traders get the option to buy, sell, store, distribute or circulate their crypto tokens for any set of periods they want.
What is the difference between crypto tokens or Altcoins?
Both crypto tokens and altcoins distinguish each other in many terms. As said earlier, crypto tokens are a small part of cryptocurrency used to send and receive cross-border payments. Either by using bitcoin or any other platform, the crypto tokens are a convenient alternative to expensive cryptocurrencies. They follow specific rules and regulations to ensure the safety of investor’s stake in the company.
A number of reputable e-commerce and IT companies prefer using crypto tokens as they are taxable and legalized. There are a number of crypto tokens such as reward tokens, security tokens, utility tokens, security tokens, asset tokens.
In contrast, altcoins came into existence after the massive success of bitcoin. They are believed to be a good substitute for bitcoin as altcoins take less transaction time of ten seconds than Bitcoins occupying 1-2 minutes.
Some of the famous altcoins are Ethereum, Ripple, Dogecoin, Litecoin, Namecoin, etc. The creation and execution of altcoins require a specific white paper with all the necessary information about the altcoin that is supposed to be launched. There are generally four types of altcoin, specialized for different purposes. These are mining-based, stable coins, security tokens, utility tokens.
In short, Altcoins aim to fill the shortcomings of Bitcoin to fulfill the main as well as other purposes of Bitcoin. Whereas, Crypto tokens are quite easy to hold for as long as you want without paying extra charges to any crypto exchange or wallet.
It’s basically a denomination of cryptocurrency used for purchases, profits, and trading on the blockchain or any other security platform. We hope this comprehensive article about the difference between crypto token and Altcoin has cleared your confusion. To know which one is your call for investing, research the most successful and profitable crypto tokens and altcoins.