UTILITY TOKENS SIMPLIFIED
The word cryptocurrency refers to both coins and tokens since it is an umbrella term for any digital asset that is exchanged over a blockchain ledger. This means that cryptocurrency is a word used to recognize the overarching technology of blockchain and encryption used to establish a medium of exchange.
Now, let’s consider the difference between a coin and a token. Essentially, a coin is a medium of exchange like the USD. It can be used in exchange for everything or anything. Therefore, coins are the very definition of “currency”, since they are easily exchangeable for goods and services. An example of a coin would be Bitcoin or Litecoin.
On the other hand, a token is a digital asset that’s tied to a very specific blockchain project. When a company launches a blockchain project, they will often offer a token in exchange for capital from interested investors. Since these tokens don’t hold any value outside of the scope of the project, they are not easily exchangeable for goods, services or other assets; unlike coins.
You can find out more about differences between coins and tokens in this article Coins vs Tokens here at GetSmart Hub.