The terms cryptocurrency and token have quite similar meanings and are often used as synonyms. However, they do have some differences. A cryptocurrency has a full-fledged blockchain with a set of inherent properties.

What Is a Token?

To create a token, specialists must possess programming skills and other knowledge. A token is always tied to a specific project, whereas a cryptocurrency is the main project or the foundation for creating tokens.

How Does a Token Differ from Cryptocurrency?

The following key differences can be identified:

• A token does not have its own blockchain; it is based on an existing platform (Ethereum, NEO, etc.);
• The issuance of cryptocurrency occurs very slowly, while tokens are issued all at once and in full;
• A token has a broader range of applications;
• Cryptocurrency has a larger scale, whereas a token is only a small part of it and is used within the project;
• Cryptocurrency is always decentralized, while a token can have a single creator, making it a centralized project.

Main Similarities

These terms are very similar for the following reasons:

• Both cryptocurrency and tokens can only exist in the virtual world;
• They can be used as a means of payment;
• They are acquired in the same way — through an exchange, exchanger, or directly from private individuals.

Practical Applications of Tokens

Tokens can be used for the following purposes:

• Rewarding users of a specific application;
• Rewarding investors for supporting a project;
• Using as an internal currency for a specific project;
• Lending — credit tokens allow borrowers to receive funds;
• Fan tokens — unique tokens for football clubs and other organizations.

It is worth noting that these concepts have already become intertwined on the Internet; however, distinguishing between tokens and cryptocurrencies is very important. This will allow you to study the project more thoroughly and reduce investment risks.