Coins, Altcoins, and Tokens Explained

There are multiple currency categories that are used by crypto traders in their day-to-day transactions. As the bitcoin blockchain developed into a system that we know and trust, other concepts such as altcoins and tokens have been introduced, giving us various options in a network of money transfers.

Coins & altcoins

While bitcoin has been developed using an open-source system, altcoins are built up on the framework provided by bitcoin. However, despite some similarities, altcoins differ widely in procedures, algorithms, and mining processes.

While some of the altcoins are familiar to bitcoin users — for example, Namecoin and Auroracoin, others are developed on different types of systems — for example, Ripple and BitShares. For instance, Ripple (XRP) has been initially developed as a payment and exchange system, not just a currency. Unlike bitcoin, Ethereum or other altcoins, Ripple is not built on a blockchain per se. Instead, it’s operating on its own patented technology, the Ripple protocol consensus algorithm (RPCA). Similar to Ripple, BitShares is not a currency but a decentralized exchange system, providing value tokens (BTS) tied to real-life assets.

Tokens

Tokens, on the other hand, are built on various platforms, and are typically introduced through Initial Coin Offerings (ICOs), which is a crypto industry’s equivalent to an Initial Public Offerings (IPOs). Nowadays, a lot of startups use ICOs as an alternative to traditional fundraising. ICOs cover a multitude of industries and can be introduced in almost every one. Notably, through successful ICOs companies often raise more than they would through a traditional investment process. This includes some of the biggest ones that happened just recently in 2018: $1.7 billion raised by Telegram and $4.1 billion raised by EOS, both through their ICOs.

---

Follow us:

::: Trade here! ::: News ::: Blog ::: Twitter ::: YouTube :::