There are over 7,000 cryptocurrency today and in this post, you have probably come across the word crypto because it is gaining more mainstream popularity by the day, interestingly even.
If you are new to this blockchain and cryptocurrency thing, this will help you know a lot more about them because they aren’t going anywhere. In fact, they might be the fundamentals foundation on which the world economy. Will be built soon, but before I get you lost in all this future prediction, understand what cryptocurrency means.
Cryptocurrency is a form of digital currency or virtual money that runs on the technology known as Blockchain, rather than by a centralized authority now let’s break that down a bit cryptocurrency is digital money that runs on a decentralized system called the blockchain, it is not controlled by the government like fiat money and can be sent and received using a set of keys called a wallet. Here is the tricky part there are different cryptocurrencies we have the crypto coin and crypto token you can easily confuse both for each other because they are both built using the same system but they have different roles to play in the blockchain ecosystem welcome to sqhub.ng your number one website for occasions hub.
Now let’s take you in for a ride. We will start with the crypto coin.
When bitcoin first came out it set the standard for what it means to be a coin, you shouldn’t be surprised because bitcoin is the grandfather of all other cryptocurrency today and that’s won’t change for as long as we know despite that there are clear-cut qualities that distinguish crypto coins from tokens which are similar to real-world money. So let’s look into the characteristics of a coin number.
one is that it operates on its own blockchain the blockchain keeps track of all transactions that involve its native crypto coin it’s more like this when you pay someone with ethereum the receipt goes to the ethereum blockchain if the same person pays you back later with bitcoin the receipt goes to the bitcoin blockchain each transaction is protected by encryption and is accessible by any member of the network in this case bitcoin and ethereum have their own blockchain and have their own native coin with which they transact namely ether and bitcoin secondly it can act as money bitcoin was created for the sole purpose of replacing traditional money the appeal of transparency and anonymity inspired the creation of other coins including Ethereum, Binance, Solana and litecoin.
This means that you can purchase merchandise and services from many major corporations today such as amazon microsoft and tesla using crypto coins, for instance bitcoin has recently become an official currency of el salvador alongside the us dollar isn’t that interesting thirdly it can be mined you can earn crypto coins in many ways.
today one is through traditional mining on the proof of work system bitcoin hunters as they are popularly called employ this method to boost their earnings the problem with this is that there aren’t that many bitcoins left to mine we have a total of a 21 million with over 18 million mind already so the process becomes more arduous every day another method is proof of stake which is a more modern approach to earning coins.
it’s lighter on energy consumption and easier to do cardano is one of the biggest coins that adopt this system we will discuss proof of stake and proof of work later now let’s recap the characteristics of a coin one that operates on its blockchain like the bitcoin blockchain in the ethereum blockchain two it can actually act as money three it can be mined these three points are what a crypto coin must characterize.
Blockchain handled if crypto coin transactions, then tokens rely on smart contracts smart contract are like an array of codes that facilitate trades or payments between users, each blockchain uses its smart contract, for example Ethereum user Erc20 Solana user Sol and Avalanche user Avax.
Now let’s get into a token unlike coins tokens do not have their own blockchain instead they operate on other crypto coins blockchains such as ethereum some of the most commonly known tokens on ethereum include shiba inu, uniswap, chainlink, Tether and many other stable coins like the usdc.
we won’t go too deep into these terminologies but we will explain token even further the first point you should note is that, token does not have their own blockchain they operate on another coin’s blockchain, like the ethereum blockchain another notable difference between tokens and coins is what they represent while crypto coins are essentially digital versions of money tokens can stand for assets or deeds.