There is a tendency to believe that cryptocurrency and tokens mean exactly the same thing. However, there are many differences that set them apart. It is important to know them to be able to identify the two most common blockchain-based digital assets. If this world interests you or you are simply curious to learn what these terms really mean, read on!
What is a cryptocurrency?
A cryptocurrency is a digital currency that is created and held electronically. The supply of a cryptocurrency is not controlled by any central authority like the Federal Reserve or the Bank of England, but instead is generated algorithmically through a process called “mining.” Some cryptocurrencies are mined using traditional methods such as CPUs or GPUs, while others use specialized ASICs (Application Specific Integrated Circuits) designed for the purpose of mining.
Cryptocurrencies, therefore, serve as a medium of exchange or a store of value. They have several characteristics:
- They are built on a blockchain which allows rules to be applied automatically
- They are decentralized and do not depend on a central issuing authority
- They go through the use of cryptography for security reasons
- They rely on codes to manage issues and transactions
What is a token?
A digital asset that can be used to represent value and/or ownership in an online network. It’s an alternative to the traditional currency that uses encryption techniques to ensure it’s not controlled by a central authority, like the Federal Reserve. What is a blockchain? It’s a public ledger of transactions maintained by a network of computers and users. The first widely-used application for blockchains was Bitcoin, which was invented in 2008. Here are some of the user token standards for creating meme token.
The ERC-20 standard
This is the most widely used token standard is the ERC-20 standard in the crypto world and meme tokens are based on it. It allows the creation of tokens that can interact with Ethereum’s decentralized application ecosystem.
The standard defines a set of mandatory and optional functions, which are listed below. Mandatory functions Account name Each token must have an account name, which is defined by the issuer in the initial transaction to create the token. It may be any string of characters up to 40 characters long. The account name is used to refer to the token contract from within a transaction.
The ERC-721 standard
The ERC-721 standard was designed to enable the creation of non-fungible tokens (NFTs). They are individually unique and cannot be exchanged with other similar tokens.
Typically, crypto tokens are programmable. It simply means that they run on software composed of smart contracts that describe the features and functions of the token and the rules of engagement of the network. It should also be noted that anyone can participate in the system without the need for special credentials. Moreover, no central authority controls the system. Instead, it runs on rules predefined by the network protocol. And finally, transparency implies that the rules of the protocol and its transactions are visible and verifiable by all.
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Some additional information about cryptocurrency and tokens
Crypto tokens, like cryptocurrency, can have value and be traded. They are also used to be representatives of some physical assets. For example, there are crypto tokens that represent tangible assets, such as real estate and art, as well as intangible assets, such as processing power or data storage space.
Tokens along with cryptocurrency are frequently used as governance mechanisms to vote on specific parameters, such as protocol upgrades and other decisions that dictate the future direction of various blockchain projects.
Meme tokens are a part of the expanding world of cryptocurrency or rather we can say that is the fun part of it. token mostly do not have their own blockchains and use mostly the Ethereum blockchain working on a decentralized financial system.
Everyone has his favourites and so is with the crypto assets but when you want to make an investment then be advised that search and study the market value of the meme coin or any other crypto asset you are interested in to invest.