First of all, it is important to understand the difference between coins and tokens. Both can be called cryptocurrency, but if coins (such as bitcoin or litecoin) work using their own blockchains, tokens live on top of existing infrastructure, such as the Ethereum blockchain. Blockchain, in fact, is a record of transactions protected by the network.
So, coins have their own independent transaction registers, and tokens rely on some third-party network to confirm and secure transactions. Coins are often used to transfer financial assets. Tokens have much more functions – this is a kind of digital contract for almost anything; physical objects, events tickets, loyalty points, etc.
Tokens are often issued through crowdsales known as the Initial Coin Offering (ICO) They get exchanged for existing coins, which in turn finance projects such as gaming platforms or digital wallets.
You can get public tokens after the end of the ICO, as well as buy them using the base currency to make a purchase. Since now any person can create a token and run crowdsale, ICOs are becoming more and more risky. Unfair businesspeople take money from investors and run away, leaving the project.
The U.S. Securities and Exchange Commission (SEC) tries to control this process and seeks to turn tokens into securities, which, like shares, will need to be regulated. The SEC warns investors about risks of purchasing tokens during public ICO rounds and insists on thorough research of all projects.
Despite the fact that crypto markets are very volatile these days, experts believe that they will stabilize once more people accept and adopt cryptocurrencies. In general, the very idea of cryptocurrencies is built around wide availability and accessibility, but this does not mean that it is easy to understand it. Let me now present you the ways to create your own coins or tokens.
