Although they may seem similar, cryptocurrencies and tokens have key differences. Cryptocurrencies, like Bitcoin, are digital currencies native to their own blockchains and act as a medium of exchange. Tokens, on the other hand, are created on existing blockchains like Ethereum and represent assets or utilities within specific projects.
Cryptocurrencies are typically intended to function as digital money, used for transactions and storing value. Tokens, however, can serve various purposes such as providing access to services, enabling governance participation, or representing physical assets. This versatility makes tokens widely used in decentralized applications.
In short, every cryptocurrency is a digital asset, but not every digital asset is a cryptocurrency. Understanding this difference is essential to navigate the digital asset market more clearly. Both play unique roles in building the blockchain technology ecosystem.
