Cryptocurrencies vs Crypto Tokens: What Cryptocurrency Investors Need to Know

What Are Digital Assets?

If you are new to the world of cryptocurrency and the blockchain, you may have heard the terms digital assets, cryptocurrencies and crypto tokens being used interchangeably.

But there three things are not the same. If you are looking to get into cryptocurrency, it is vital that you understand the differences between them.

Put simply, digital assets are any non-tangible resources or content that can be stored digitally. It can include content like sound files, photographs, video clips or data like digital documents and personal information databases stored digitally on hard drives and computers.

Digital assets can also be traded.

Although cryptocurrencies and crypto tokens are considered digital assets, there are special because they make use of cryptography technology to ensure security, authenticity and prevent counterfeiting or double-spending.

With that in mind, here are the main differences between cryptocurrencies and crypto tokens you need to know!

TL;DR: Cryptocurrencies vs Crypto Tokens

• Cryptocurrencies and crypto tokens are digital assets that use cryptography technology to ensure security, authenticity and prevent counterfeiting or double-spending.
• Cryptocurrencies are the native ‘currency’ of their respective blockchain networks. Whereas crypto tokens are generally built on other non-native blockchain networks.
• Cryptocurrencies are largely used as a means of payment, a store of value or as a speculative instrument. But, crypto tokens can serve a variety of functions. Here are some of the most popular types of crypto tokens:
  • Asset-Backed Tokens
  • Governance Tokens
  • Non-Fungible Tokens (NFTs)
  • Payment Tokens
  • Security Tokens
  • Utility Tokens.

Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their own due diligence and consider their financial goals before investing in any investment product. The writer may have a vested interest in the investments products mentioned. 

What is a Cryptocurrency?

I’m glad you asked.

A cryptocurrency is the native digital asset of a blockchain network that is issued by the same blockchain network it is built on. 

FYI: A blockchain network is a decentralised ledger that records every transaction made across a peer to peer network. With the network, transactions can be processed without the need for a central third-party clearing authority.

In addition, these cryptocurrencies use cryptography technology to ensure security, authenticity and prevent counterfeiting or double-spending.

Cryptocurrencies are largely used as a means of payment, a store of value or as a speculative instrument to be traded.

Examples of cryptocurrencies include:

• Bitcoin = bitcoins (BTC)
• Cardano = ADA
• Ethereum = Ether (ETH)
• Litecoin = LTC
• Ripple = XRP
• SushiSwap = SUSHI.

You should also know that cryptocurrencies that are not Bitcoin are classified as altcoins.

The word altcoins is a portmanteau for the words alternative coins.

So basically, any other cryptocurrency that is not Bitcoin falls under the category of altcoins:

Now that you know a bit more about cryptocurrencies, let’s explore what crypto tokens are.

What is a Crypto Token?

Whereas crypto tokens can be simply defined as non-native blockchain assets that are created on existing blockchains networks.

These tokens also rely on existing blockchain networks and have more functions than cryptocurrencies.

The most popular crypto tokens are actually ERC-20 tokens: tokens created on the Ethereum blockchain that adhere to the ERC-20 token standard for fungible tokens.

In fact, some of the biggest stablecoins like DAI, USDC and DAI are ERC-20 tokens.

Crypto tokens also serve a variety of functions and can deliver more value to holders beyond speculative returns.

Here are some of the most popular types of crypto tokens:

1. Asset-Backed Tokens: Tokens that represent a claim on an underlying asset like Gold (GOLD), a fiat currency (stablecoins), real estate and more.
2. Governance Tokens: Tokens that grant holders voting rights on a blockchain project. Holders can vote to influence decisions like the adding and removing of features or a revamp of the governance system and more. These tokens are largely distributed by decentralised finance (DeFi) projects as powers and rights need to be evenly distributed to network participants to preserve decentralisation.
   The most popular example of a governance token is the Maker (MKR) crypto token.
   
3. Non-Fungible Tokens (NFTs): Like the name suggests NFTs are non-fungible. This means that an NFT is a unique digital asset, that cannot be replicated and cannot be traded for something of equal value. As such, each token represents a unique value. NFTs are the opposite of fungible assets like fiat money, Bitcoin or Gold which are mutually interchangeable and can be exchanged for something of equal value.
4. Payment Tokens: These tokens are similar to cryptocurrencies as they are cryptographically secured digital representations of value that can be utilised or is designed to be utilised as a medium of exchange for goods and services.
5. Security Tokens: Tokens that function as a representation of real-world assets like stocks and bonds on the blockchain.
6. Utility Tokens: Tokens with a clearly defined utility within the blockchain project. Examples include tokens that can be exchanged for goods and services provided by the blockchain project.

Can’t Get Enough of Cryptocurrencies?

Fret not!

We have partnered with SingSaver and American Express to launch this super exclusive Bitcoin campaign for the first time ever in Singapore.

You will receive up to S$365 worth of Bitcoin when you successfully apply for a credit card. This offer is ONLY available on Seedly & SingSaver. You will not find it anywhere else.

These rewards will be given out from now until 7 November 2021 OR until S$1 million worth of Bitcoin has been claimed, whichever is earlier.

Also, the first 2,000 eligible applicants will receive an additional S$100 worth of Bitcoin so get to it!

If you were wondering, these rewards will also be given out to your Gemini account as they are our exclusive cryptocurrency wallet partner for this campaign.

How to Apply:

1. Apply for your favourite credit card.
2. Receive up to S$265 (S$265 for new customers and S$50 for existing customers) worth of Bitcoin after you fulfil the eligibility requirements.)
3. Spend S$500 on the card within the first 30 days of card approval.
4. Be one of the first 2,000 eligible applicants to receive up to an additional S$100 worth of Bitcoin.

Eligible Cards: American Express in Singapore

Here are the cards you can apply for with this campaign:

More details about the cards can be found on the landing page. And of course, terms and conditions apply.

Disclaimer: Seedly and Singsaver will never ask you for your crypto wallet address nor instruct you to transfer any crypto to us throughout any of the campaigns.