Categorization of Cryptocurrencies
It is important to know that all coins or tokens are included in the boundary of cryptocurrencies, even if a large portion of the coins do not function as a currency or medium of exchange. The meaning of cryptocurrency is a misnomer since a currency technically represents a value of
The commonly used categorization of cryptocurrencies is divided into Alternative Cryptocurrency Coins (Altcoins) and Tokens.
Alternative cryptocurrency coins also called as altcoins or coins as we call them. Altcoins basically refers to coins that are alternative to Bitcoins which means that the majority of altcoins are derived from Bitcoin. They are built using Bitcoin’s open-sourced original protocol with changes to its underlying codes, therefore deriving an entirely new coin with a different set of features. The concept of modifying open source codes to make new coins is called
There are other altcoins that
Tokens represents a particular asset or utility, that exists on top of another blockchain. Tokens represent any assets that are replaceable and tradeable.
Making tokens is a much easier process as you do not have to modify the codes from a particular protocol or create a blockchain from nothing. All you have to do is follow a standard open-source template of the blockchain such as on the
The main difference between altcoins and tokens are their structure. altcoins are distinct currencies with their own separate blockchain while tokens work on top of a blockchain that simplifies the creation of decentralized applications. The majority of coins that exists are tokens, since they’re much easier to create.