Lawyer Braeden Anderson has a keen interest in cryptocurrecy and its underlying blockchain technology. Serving on the advisory board of Altcourt.org, Braeden Anderson advises industry players on the legal issues surrounding coins and tokens.
In the crypto world, coins and tokens are sometimes used interchangeably, even though they are completely different digital assets. To understand the distinction, one must first understand what cryptocurrency is: a virtual currency secured by cryptography. The transfer of this virtual currency is encrypted to ensure security and verifiability. Bitcoin was the first cryptocurrency. Transactions were supported by a decentralized ledger called the blockchain. This ledger was essentially a secure record of all transactions.
Since the creation of Bitcoin, alternative cryptocurrencies have come up, including both coins tokens. Coins are created by making code changes to Bitcoin’s open-source protocol, resulting in an entirely new instrument. Examples are Namecoin and Litecoin. However, there are also coins that are not created from Bitcoin’s protocol but from entirely new blockchains and protocols. Examples include Ethereum and Ripple.
Tokens, on the other hand, are simply representations of assets or utilities that are created from blockchains. They represent assets such as commodities, tradable securities, or even other cryptocurrencies. Their functionality, therefore, is far greater.
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