With ICOs being the rage, everyone is rushing into purchasing coins and tokens. This is typically done via Exchanges, or direct wallet-to-wallet deposits. But are all ICOs the same? Is a Coin-based ICO the same as a Token-based ICO?
Crypto Coins
Coins differ from Tokens as they are foundational to the crypto economy. The distinguishing features of Coins is that it can be mined. Usually based on a crypto algorithm, and having its own associated wallet.
Crypto Tokens
Tokens are typically built on a coin. 90% of tokens are built on Ethereum. There are other less popular platforms but Ethereum is the most mature platform to date. Tokens are built around Smart Contracts, which is a feature of Ethereum. In a sense, Tokens are derivatives of Coins. They can’t be mined directly, but leverage the capacity created via the underlying coin. Tokens help facilitate the future by enabling business functions within a transaction. However, Tokens are dependent and impacted by the underlying coin.
Liquidity
Both Coins and Tokens have their challenges in liquidity. They are supported by various exchanges, even traded directly in online commerce platforms like eBay. With weak escrow governance in transactions, its a challenge to buy and sell coins and tokens.
