Altcoins
Choice cryptocurrency coins are also called altcoins or just “coins”. They’re used. Altcoins simply refers to coins that are an alternative to Bitcoin.
The vast majority of altcoins are a variant (fork) of Bitcoin, constructed using Bitcoin’s open-sourced, original protocol with changes to it’s underlying codes, therefore conceiving a fresh coin with a different set of attributes.
A central concept of changing open source codes to make new coins is called hardforks, which can be further explained in this article.
Some examples of altcoins that are variations of Bitcoin’s codes are Namecoin, Peercoin, Litecoin, Dogecoin and Auroracoin.
There are other altcoins that are not derived from Bitcoin’s open minded protocol. Rather, they’ve established their own Blockchain and protocol that affirms their native currency.
Samples of those coins include Ethereum, Ripple, Omni, Bitshares, NEO, Waves and Counterparty.
A commonality of all altcoins is they each have their own individual blockchain, where transactions relating to their native coins happen in.
Interesting fact: The first Altcoin was Namecoin, that was made at Apr 2011. It’s a decentralized open source information registration and transfer system
Tokens
Tokens are a representation of a specific asset or usefulness, that generally resides on top of another blockchain.
Tokens can represent basically any assets that are fungible and tradable, from commodity to loyalty factors to even other cryptocurrencies!
Creating tokens is a much easier procedure as you don’t have to change the codes out of a specific protocol or make a blockchain from scratch.
All you need to do is follow a standard template on the blockchain - like on the Ethereum or Waves platform - that permits you to make your own tokens.
This functionality of producing your own tokens is made possible throughout the usage of smart contracts; handheld computer codes that are self-executing and don’t need any third-parties to function.
It really is super cool! Here’s a look at the procedure:
Token Creation Procedure
Tokens are made and distributed to the public via a Initial Coin Offering (ICO), that’s a means of crowdfunding, during the release of a brand new cryptocurrency or token to finance project development.
It’s comparable to an Initial Public Offering (IPO) for stocks, with crucial distinctions that are explained in this article. Most are crazy over ICOs as they represent a fantastic way of identifying intriguing projects that may provide great financial returns.
Interesting Fact: A template for token creation is wonderful as it offers a standard interface for interoperability between tokens. This make it so much easier for you to store different sort of coins within one wallet. An example is the ERC-20 standard on the Ethereum blockchain, that has is used by over 40 tokens
Last Thoughts
The main difference between altcoins and tokens is in their structure; altcoins are independent currency with their own different blockchain while tokens function on top of a blockchain that facilitates the creation of principal applications.
The vast majority of coins in presence (close to 80%) are tokens, since they’re much more easier to make.