Crypto assets, which are among the most discussed investment tools of recent years, are on everyone’s lips with the rising trend of Bitcoin. Citizens, especially those who want not to lose money in the face of inflation, often invest in crypto assets that they hear from friends. But many don’t even know exactly what they’re actually investing in.
Let’s put it this way, we don’t even know the names of the things we invest in. That is to say, crypto assets, which are thousands of types for many people today, are often referred to as “crypto money”. However, this is a huge mistake for the cryptocurrency community. Because everything you buy and sell is not actually cryptocurrency.
Cryptocurrency (coin) and token are not the same thing.
Some of the things traded on exchanges like Binance are cryptocurrencies, while others are actually tokens. In the community, these terms are often used together. Actually, this is not wrong. Cryptocurrency and tokens are very close assets, but they are also so far apart. Let’s take a closer look at the features of cryptocurrencies and tokens.
Features of cryptocurrencies:
- They have their own private blockchain networks.
- They are used as a medium of exchange, that is, money.
- They are entities in their own right. They do not represent any other assets or services.
- It has cryptography (encryption) to ensure system security.
- It is not dependent on any authority. They are managed by codes.
Yes, Bitcoin is indeed a cryptocurrency.
The features we have left above, if you pay attention, actually describe Bitcoin. That’s why we can accept Bitcoin as a real cryptocurrency. However, Ethereum is a cryptocurrency just like Bitcoin.
Features of Tokens:
- They do not have their own blockchain networks. They are connected to another network.
- They can be used not just as money, but to play games, open access to services or complete DeFi procedures on the platforms on which they are installed.
- It does not have encryption features like in Bitcoin or Ethereum.
- They can be managed by an individual or a foundation. If you want, you can create a token today.
- They can also be divided into subclasses.
Most of the tokens are built on the Ethereum network.
Ethereum, the world’s second largest cryptocurrency by volume, is a boon for tokens due to its structure. Aware of this, teams prefer Ethereum the most when they want to develop tokens. For example, fan tokens belonging to football clubs. FC Barcelona Fan Token (BAR) is a token linked to the Chiliz chain, one of the sub-chains of the Ethereum network. All of the features we have mentioned above are actually among the features offered by FC Barcelona Fan Token (BAR).
How do we know if a crypto asset is a cryptocurrency or a token?
Let’s say you want to invest in any crypto asset, but first you want to find out if it’s a cryptocurrency or a token. The easiest thing you can do would be to access that crypto asset’s website and browse its whitepaper. If it says there that the crypto asset has its own network, it is a cryptocurrency. It is a token if it is connected to another network. It is that easy to understand.
Whitepaper what admin?
If you are interested in the cryptocurrency community, you should get used to reading. A whitepaper, sometimes referred to as a “white paper”, is the technical document of a project. You know, when you buy an electronic device and there are brochures with pages of text in it, that’s what a whitepaper is. All details about the project in question are written here. This way, you have a good understanding of what you are investing in.
- Editor’s Note: If you want to invest in a crypto asset, it’s a good idea to read its whitepaper first. If you read the document very carefully and really understand what the team will do, you can easily figure out whether the project is promising or not, even if you are not an expert. Thus, you can participate in pre-sale programs or make long-term investments. One of the best investment advice that can be given in this community is the advice to read the whitepaper.
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