WHAT IS THE DIFFERENCE BETWEEN A COIN AND A TOKEN || 10% beneficiary to tron-fan-club

Hello friends, today I will like to explain the difference between coin and token. Some people think they are the same but they are different. I will explain the differences and the categories of tokens.

I will like to use this analogy to explain the difference between a coin and a token. For instance, you can go to a dealership to buy a car and that means having the responsibility to do the maintenance like changing the car oil, changing the tyres, and fixing the engine when it have a fault. But it doesn't have to worry about the maintenance, you can rent a car for a monthly payment and the owner of the car will be responsible for the maintenance. It will be left to you to decide which one best suits you and sometimes it might be because you don't have enough cash to buy a new car.

This analogy explains the difference between a coin and a token. A coin has its own blockchain while a token doesn't have its own blockchain, it is only created to run on another coin's blockchain. A developer can create a token to run on a certain blockchain and pay rent on that token to run that blockchain.

Ethereum blockchain is a good example, Ethereum stores its transaction record and validates its own transactions. The developer of Ethereum has the responsibility to maintain the blockchain and update it. ERC20 tokens are run on the Ethereum blockchain. An example of an Ethereum token is a basic attention token. The developers of the basic attention token were not big enough to create their own blockchain so they create a token and run it on the ethereum blockchain. That means the developer of the basic attention token doesn't have to worry about maintenance, they can now concentrate on rewarding users of the brave browser with their token.

If the developers of a token find out that their platform is growing beyond their expectations, they migrate to a coin. In other words, they will have to create their own blockchain. An example of a project that migrates from one token to a coin is crypto.com.

THE BRIDGE

The problem is that there is no way to convert a token to a coin but the developer can find a way to create to bridge that will allow the holders of the token to convert the token into a coin.

CATEGORIES OF TOKEN

• PLATFORM TOKEN

Platform token tokens are created to support a dApp and any useful platform. For instance, the pancakeswap platform lets users swap one token for another and they have their own token called cake.

• SECURITY TOKEN

These types of tokens are created to represent the price of another asset. In other words, a token can be created and pegged to a value of a diamond. You can buy that token at the price of a diamond and not have a physical diamond. That way you prevent a way from robbers invading your house. The robbers can hack an Ethereum blockchain but there is a potential that they could invade your house.

• TRANSACTIONAL TOKENS

These types of tokens are only used to transfer money. XRP and xDai are good examples. One of the benefits is that the transaction fee is very low.

• UTILITY TOKENS

Unlike security tokens that you don't do anything with, you only own them but utility tokens are used to carry out a certain thing on a platform such as a basic attention token. You use a utility to advertise.

• GOVERNMENT TOKEN

These types of tokens allow the holder to vote on some particular things on a platform. The holder can make decisions on the platform with their token, and the decision with the most votes will be the winner.

CONCLUSION

If you don't want to worry about creating a blockchain and worry about the transactions are validated. You can just create a token run run it on a blockchain such as Ethereum or Binance Smartchain. I believe you have learn something about the difference between a coin and token and the categories of token.

REGARDS:
@olatunde1