Difference between cryptocurrency coins and tokens

[buwaytress]

Another way I like to explain in simple terms is that coins are generally generated or "mined", with every addition of a new block on its blockchain. These stay in circulation.

Tokens are generally created all at once, its entire supply at the same time. They are distributed, not mined.

To interpret it to a real life thing:
Coin: Money
Token: Shares (of different companies)
Not this simple, of course, but you can understand the difference between the two things based on that.

Quite correct, I agree, especially if considering the original idea of creating tokens for sale during an ICO! But one should be careful here - unlike shares of a company, where you get actual share certificates, therefore owning stakes in the company, including rights such as voting and and decision making, dividend distribution, etc... none of this will apply to any ICO no matter how they make it look. You don't actually buy a share of the ICO company or project, you pay to own digital tokens that the project/company promises a number of things on. You still don't own the company, don't reserve any rights to information from them from board meetings etc, you don't get votes.

Plus, with ICOs now having to fix their tokenised models to fit with regulation, they can't even distribute dividends on tokens now (they'd be securities otherwise).

[1714671551]

1714671551

[kimochidesh]

Hello!

I am a little unsure here yet, so that's why I am posting it here - I just need some clarification. The main question here is - are coins and tokens the same thing or not?
From what I've read, I understand it like this:

Bitcoin, Ethereum, LTC, monero, dash etc. - cryptocurrency, coins, a medium of exchange, digital money

Tokens - they are based on Ethereum blockchain and they are adhering to a certain set of standards called ERC20, examples of those ERC20 tokens would be Gnosis, Golem, Aragon, OmiseGO etc. - all the cryptos that are kinda like derivatives of Ethereum and hence they are called tokens.

Now, these tokens, they are not used as a digital money like BTC or ETH, instead they have their own other purpose as a medium of exchange - for example Aragon is used to manage organizations and companies, and Augur is related to prediction markets, Civic is a tool for identity verification based on blockchain. So, these tokens are not exactly money, they are different tools for different purposes based on the blockchain technology. They have the price (the value) though.

Do I get the concept right here? If I am mistaken anywhere, please feel free to correct me and help me to come closer to understanding.

Bitcoin, Ethereum etc are developed to serve as an alternative to fiat currency. They have their own blockchain and unlike tokens, they are not dependent or associated with others blockchain. ERC20 is Ethereum token standard and is operated on Ethereum blockchain.

[chr.rit]

Bitcoin, Ethereum etc are developed to serve as an alternative to fiat currency. They have their own blockchain and unlike tokens, they are not dependent or associated with others blockchain. ERC20 is Ethereum token standard and is operated on Ethereum blockchain.

[/quote]

does this mean that a token can never become really a currency replacement as they are just surfing the waves of the underlying coin?