Tokens Vs Altcoins

Before I start investing, I wanted to make sure that I understand the difference between Tokens and Altcoins.

Altcoins are basically an alternative coin from Bitcoin. They are a fork of Bitcoin, which is an open source original protocol for generating Bitcoin. With Altcoins, there are changes in the underlying code that can take advantage of a different set of features. Some altcoins are not open-sourced like Bitcoin. They have their own Blockchain and protocol that supports their own currency. Ex: Ethereum. The main thing to remember is that each each altcoin possess its own independent Blockchain where each transaction uses its own coins.

Tokens operate on top of the Blockchain and represent a particular asset or utility. They can represent any asset that is worth value. Tokens are usually made using smart contracts. As an investor you receive tokens when you invest money into a company offering an ICO (Initial Coin Offering). Its pretty similar to a stock with some important differences.

You can read more here. This article also includes useful guides on various exchanges and wallets.

I also learned a great analogy today: Ethereum represents an app store in your smartphone. More on that here.

I also came across a crypto podcast that you can listen to on iTunes: Crypto101. I’ll give my thoughts on the podcast in another post.