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What is the difference between cryptocurrency and tokens?

Learn from Cryptocurrency

What is the difference between cryptocurrency and tokens?

Cryptocurrency vs. Tokens: Key Differences

While both are digital assets using blockchain technology, cryptocurrencies and tokens have distinct characteristics.

Cryptocurrency
* Independent blockchain: Cryptocurrencies operate on their own blockchain network.
* Native asset: They are the primary currency of their respective blockchain.
* Medium of exchange: Often used as a payment method or store of value.
* Examples: Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC)

Tokens
* Built on existing blockchain: Tokens are created on top of an already existing blockchain (like Ethereum or Binance Smart Chain).
* Specific purpose: They serve a particular function within an ecosystem, such as representing ownership, utility, or security.
* Variety of types: There are different types of tokens including utility, security, and asset-backed tokens.
* Examples: ERC-20 tokens (like USDT, UNI), Binance Coin (BNB) (though it also has its own blockchain now)

To summarize:
* Cryptocurrencies are the foundational assets of blockchain networks.
* Tokens are built upon these foundations and have specific functions within their respective ecosystems.

Would you like to know more about specific types of tokens or their use cases?

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