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Cryptocurrency coin

Cryptocurrency coin

A cryptocurrency coin is a digital or virtual currency secured by cryptography and is a native asset of a blockchain network that can be traded and used as a medium of exchange or store of value.

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Edits on 29 Aug, 2022
Amy Tomlinson Gayle
Amy Tomlinson Gayle edited on 29 Aug, 2022
Edits made to:
Timeline (+2/-2 events) (+197/-183 characters)
Article (+132/-226 characters)
Article

Cryptocurrency coins and tokens are often considered one and the same. However, it would be more correct to say a cryptocurrency coin is a type of cryptocurrency token, and, perhaps, more correctaccurate to say that, while they are alike, a cryptocurrency coin is its own thing. At its core, a cryptocurrency coin is tied to an underlying blockchain network, as a native asset of that network. The coin is intended to be used as a form of decentralized digital money to be used over blockchain networks, traded on blockchain networks, and to transfer value without the need for payment processors or related middlemen. Often, when people talk about "cryptocurrency," they refer to cryptocurrency coins, even though cryptocurrency tokens have largely increased in popularity and usage compared to coins.

...

A cryptocurrency coin is not intended to serve utility functions, but operateoperates on its own blockchain, where it acts as a native currency within a specific financial system. In this system, the coin is essentially used as a medium of exchange or a store of value in the network, and the native coin of a network can only be transferred between participants of the particular network.Typically, cryptocurrency coins exhibit the following characteristics:

...

Cryptocurrency coins are cryptographically secured, and maintain a tamper-resistant record of transactions on the associated blockchain. The ledger and blockchain verifiesverify each transaction made using their currency, and this ledger is distributed across the cryptocurrency coin's network.

...

These coins are issued by the associated blockchain network, and often have a hard cap on the amountnumber of coins expected to be issued. This can increase the value of the cryptocurrency coin. And new coins can be minted through the consensus mechanism, such as proof-of-work or proof-of-stake networks, each of which havehas theirits own mechanism for minting coins.

...

Similar to minting coins, a network can choose to remove coins from circulation. Depending on the network, this can be done for several reasons. In some cases, it is to retain the value of the currency; in some, in some it can occur to punish users on a network that are improperly behaving. One common method of removing coins is through a process called "burning," in which coins are sent to a wallet address that only receives coins, which cannot be accessed, and effectively removes them from circulation.

...

The difference between coins and tokens issounds simple sounding, but tends to be a little more tricky in practice. Generally, theThe key distinction is thata coinscoin areis the native asset of a blockchain, such as Bitcoin or Ethereum, whereas a token is created by a platofrmplatform or application built on top of an existing blockchain, such as USDT. Coins are generally, used for governance (as noted above, used for governance), transactional fees, and related use cases on the original blockchain, while tokens represent a myriad of real-world use cases, such as gaming, Stablecoinsstablecoins, NFTs, and more.

...

One other category of cryptocurrency coin, which is sometimes considered different from traditional cryptocurrency coins, is the altcoin. These are, in one sense, any coin that is an alternative to Bitcoin, and are essentially created to be currency. Some of these coins are created from hardforks of the Bitcoin blockchain, which technically gives the altcoin a native blockchain and ecosystem, but is recognized as a variant of the Bitcoin blockchain. Some of these coins include Namecoin, Litecoin, Dogecoin, orand Auroracoin. Due to the nature of some altcoins, they are also called meme coins in some cases.

...

And are generally considered separate from the native coins on blockchains and protocols such as Ethereum, Ripple, Omni, Bitshares, Solana, or Waves. The coins associated with these blockchains are intended to support their native blockchain and protocol as a native currency, and are alternatives to Bitcoin, while offering different levels of intention around their use as currency. Typically, these coins are not considered altcoins.

...

Unlike tokens, cryptocurrency coins can be created specifically for the purpose ofto actingact as money, or a decentralized replacement for or alternative to fiat currencies. For example, Bitcoin was created specifically for the purposeto of replacingreplace traditional money. And while both coins and tokens can be used for transactions, coins can be used specifically to purchase merchandise and services, from both digital and physical organizations.

Timeline

August 26, 2022

Bitcoin has crashed 68% from its peak, but one investor says the latest crypto winter is a 'warm winter.'

August 26, 2022

Prices of Ethereum's original coin ETH soar as miners migrate ahead of merge.

August 26, 2022

South African cryptocurrency ownership rate at 10% percent.

August 26, 2022

Bitcoin has crashed 68 percent from its peak, but one investor says the latest crypto winter is a "warm winter."

August 26, 2022

Prices of Ethereum's original coin ETH soar as miners migrate ahead of merge.
Edits on 26 Aug, 2022
Aleksander Holm
Aleksander Holm edited on 26 Aug, 2022
Edits made to:
Timeline (+7 events) (+558 characters)
Description (+195 characters)
Article (+4770 characters)
Further Resources (+9 rows) (+33 cells) (+1186 characters)
Topic thumbnail

Cryptocurrency coin

A cryptocurrency coin is a digital or virtual currency secured by cryptography and is a native asset of a blockchain network that can be traded and used as a medium of exchange or store of value.

Article
Overview

Cryptocurrency coins and tokens are often considered one and the same. However, it would be more correct to say a cryptocurrency coin is a type of cryptocurrency token, and, perhaps, more correct to say that, while they are alike, a cryptocurrency coin is its own thing. At its core, a cryptocurrency coin is tied to an underlying blockchain network, as a native asset of that network. The coin is intended to be used as a form of decentralized digital money to be used over blockchain networks, traded on blockchain networks, and to transfer value without need for payment processors or related middlemen. Often, when people talk about "cryptocurrency" they refer to cryptocurrency coins, even though cryptocurrency tokens have largely increased in popularity and usage compared to coins.

A cryptocurrency coin is not intended to serve utility functions, but operate on its own blockchain where it acts as a native currency within a specific financial system. In this system, the coin is essentially used as a medium of exchange or a store of value in the network, and the native coin of a network can only be transferred between participants of the particular network.Typically, cryptocurrency coins exhibit the following characteristics:

  • Decentralized, or not reliant on a central issuing authority, and reliant on code to manage issuance and transactions
  • Built on a blockchain (or related Distributed Ledger Technology [DLT]), allowing participants to enforce the rules of a system in a trustless and automated fashion

Cryptocurrency coins are cryptographically secured, and maintain a tamper-resistant record of transactions on the associated blockchain. The ledger and blockchain verifies each transaction made using their currency, and this ledger is distributed across the cryptocurrency coin's network.

Minting and burning

These coins are issued by the associated blockchain network, and often have a hard cap on the amount of coins expected to be issued. This can increase the value of the cryptocurrency coin. And new coins can be minted through the consensus mechanism, such as proof-of-work or proof-of-stake networks, each which have their own mechanism for minting coins.

Similar to minting coins, a network can choose to remove coins from circulation. Depending on the network, this can be done for several reasons. In some cases it is to retain the value of the currency, in some it can occur to punish users on a network that are improperly behaving. One common method of removing coins is through a process called "burning" in which coins are sent to a wallet address that only receives coins, which cannot be accessed, and effectively removes them from circulation.

Coins versus tokens

The difference between coins and tokens is simple sounding, but tends to be a little more tricky in practice. Generally, the key distinction is that coins are the native asset of a blockchain, such as Bitcoin or Ethereum, whereas a token is created by a platofrm or application built on top of an existing blockchain, such as USDT. Coins are generally, as noted above, used for governance, transactional fees, and related use cases on the original blockchain, while tokens represent a myriad of real-world use cases, such as gaming, Stablecoins, NFTs, and more.

Altcoins

One other category of cryptocurrency coin, which is sometimes considered different from traditional cryptocurrency coins, is the altcoin. These are, in one sense, any coin that is an alternative to Bitcoin, and essentially created to be currency. Some of these coins are created from hardforks of the Bitcoin blockchain, which technically gives the altcoin a native blockchain and ecosystem, but is recognized as a variant of the Bitcoin blockchain. Some of these coins include Namecoin, Litecoin, Dogecoin, or Auroracoin. Due to the nature of some altcoins, they are also called meme coins in some cases.

...

And are generally considered separate from the native coins on blockchains and protocols such as Ethereum, Ripple, Omni, Bitshares, Solana, or Waves. The coins associated with these blockchains are intended to support their native blockchain and protocol as a native currency, and are alternatives to Bitcoin, while offering different levels of intention around their use as currency. Typically, these coins are not considered altcoins.

Coins as money

Unlike tokens, cryptocurrency coins can be created specifically for the purpose of acting as money, or a decentralized replacement for or alternative to fiat currencies. For example, Bitcoin was created specifically for the purpose of replacing traditional money. And while both coins and tokens can be used for transactions, coins can be used specifically to purchase merchandise and services, from both digital and physical organizations.

Further Resources

Title
Author
Link
Type
Date

Coins, Altcoins, and Tokens: What Is The Difference?

Web

August 26, 2022

Crypto Coin vs. Token: Understanding the Difference

Web

Cryptocurrency: What It Is and How It Works - NerdWallet

Web

How to tell if a cryptocurrency project is a Ponzi scheme

Web

August 26, 2022

The Crypto Market Crashed. They're Still Buying Bitcoin.

David Yaffe-Bellany

Web

August 2, 2022

Timeline

August 26, 2022

South African cryptocurrency ownership rate at 10%.

August 26, 2022

Prices of Ethereum's original coin ETH soar as miners migrate ahead of merge.

August 26, 2022

Bitcoin's price tumbles below $21,000 after Powell's hawkish remarks.

August 26, 2022

Bitcoin has crashed 68% from its peak, but one investor says the latest crypto winter is a 'warm winter.'

August 19, 2022

Sudden cryptocurrency market drop sends Bitcoin price below $22,000.

August 18, 2022

E-commerce giant Mercado Libre introduces cryptocurrency in Brazil and plans wider Latin America use.

August 13, 2022

While Gains Have Been Slower than most crypto assets, meme coin economy swells by 24%.
Edits on 25 Aug, 2022
Jen English
Jen English edited on 25 Aug, 2022
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Jen English"Created via: Web app"
Jen English created this topic on 25 Aug, 2022
Edits made to:
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 Cryptocurrency coin

A cryptocurrency coin is a digital or virtual currency secured by cryptography and is a native asset of a blockchain network that can be traded and used as a medium of exchange or store of value.

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