Have you just started learning the basics or already an expert in the field of cryptocurrencies? You understand how to trade and invest. Let’s do a little test then. Do you know what “token” and “coin” are? Can you name at least 5 differences between them? If the answer is “no”, then this article is for you! If “yes”, then read to the end and get a recommendation by Vladimir aka Lado Okhotnikov on how not to blow up the deposit and invest for real in worthwhile projects.
Vladimir Okhotnikov is a person with a wide outlook and analytical mind. Lado is the owner and CEO of Meta Force (and CEO of Forsage in the past). He understands the complexities of financial markets and considers cryptocurrency as a powerful tool for changing stereotypes and creating new opportunities. His commitment and dedication make him a leader in this field.
What made Lado successful? He has established several projects, including the Meta Force platform with the unique Metaverse.Lado is a crypto enthusiast, one of the most authoritative experts in the field of crypto business.
Why the token cannot be a coin. Lado Okhotnikov about fundamental differences
On the one hand, the bearish cycle devalues some projects and on the other hand, it opens the way for new tools. That is why you see how one coin reaches thе new low, although before that it was predicted a great future and the other shows an incredible increase. What is the secret?
The answer to the question why Forcecoin operates on Ethereum
The difference is that tokens, unlike coins, do not have their own blockchain. They, in fact, live and function inside other networks. That is, a token is like a guest who lives in someone else’s house but it has its own rules and functions.
Everything is easier with coins. They have their own blockchain, where they themselves are the main asset. It is as if they had their own house where they control everything and let other “guests” in.
Vladimir aka Lado Okhotnikov explains with simple words how the blockchain works on the basis of smart contracts:
- We have an agreement (smart contract) that is in a file on the computer. It spells out the rules and conditions that must be met for something to happen. For example, you and your friend made a deal – if you send him a certain amount of money, he will automatically transfer the required amount of cryptocurrency.
So, most of the tokens are based on smart contracts, when the coins work according to the algorithms of their own blockchain, as in the example with bitcoin: you send BTC but its amount does not change, only the balance changes.
In the case of sending a token, both the amount and quantity change.
So we came to one of the most important differences – the coins do not move anywhere, instead, only the numbers on the account change, which is noted in blockchain transactions.
Why not create a coin instead of a token?
Let’s use an example to show why some people choose coins and others choose tokens.
You have a house, and in order for it to function, you need to maintain it – repair the roof, windows, walls, and so on. It can be said that you bear full responsibility, and this requires corresponding costs. And this is not to mention the fact that you will need significant capital to purchase this house first.
Others prefer to rent housing so as not to worry about the associated expenses. You do not think that something will break and it will need to be repaired. It is easier for you to pay the “rent” and shift all responsibility to the owner.
So, the owners of houses are those who have their own blockchain, and, accordingly, their own coin.
The owners of tokens, let’s call them “tenants”, are no worse. But unlike anyone, these people don’t have a headache that the blockchain might break or be hacked.
Instead of making the blockchain work, you free up energy and use it to grow your business. Actually, this is what happened with the Meta Force Metaverse.
- “The fact is that coins are usually used as money. They have their own blockchains and are responsible for maintaining the stability and security of their network. On the other hand, tokens are more versatile digital assets that can represent anything from shares and voting rights to access to certain services or goods. Why is it beneficial? Imagine you are launching your own project and want to attract investors. Using a blockchain like Ethereum allows you to avoid creating your own network, as it is very expensive and difficult. Instead, you can focus on developing your product, which Lado Okhotnikov made,“
Willy Woo, an analyst specializing in data and trend analysis on the cryptocurrency market, showed with a simple example why it is sometimes better not to have a coin but to use a token instead.
Tokenomics. Lado Okhotnikov on why it is a token and not a coin
An example of a blockchain is Ethereum, which stores value and validates transactions. In turn, ERC-20 tokens use the capabilities of this blockchain, which serves as an infrastructure for them. For example, Forcecoin is a token and it is created on the Ethereum network.
- “The idea here is that the Meta Force team has created a platform where users get rewarded for their work. However, creating your own blockchain for this purpose was not practical, as it required significant efforts and resources. Instead, we use the Ethereum blockchain as the underlying infrastructure. This allowed us to focus on developing a great product called Metaverse, relying on Ethereum for security and stability…”
Vladimir aka Lado Okhotnikov
To clearly understand what the point is, look at the comparison table that reflects the pros and cons of the Ethereum coins and the Forcecoin token:
| Aspect | ETH | Forcecoin |
| Main purpose | A means of exchange and a value store. | Built to support Meta Force ecosystem |
| Own blockchain | Has its own network. | Created on the basis of an existing one. |
| Development and maintenance | Requires its own development and infrastructure. | Uses the infrastructure of the founder blockchain, reducing costs. |
| Speed and scalability | Has a limitation. | More flexible and fast growing tool. |
| Development complexity | Requires more effort to build and maintain. | Available and less costly to develop. |
| Possibilities | Used as a means of exchange and storage of value. | Provides access to platform functions (work, entertainment, education) |
| Flexibility | Less flexible in customization and functionality. | Customized for various scenarios. |
| Limited to basic functions (for example, ETH is rarely used as a means of payment). | You can exchange, store and open new levels of marketing programs. | |
| Exchange and liquidity | The instrument is highly liquid and available for exchange. | Liquidity is provided by periodically burning the token, which automatically increases its value. |
As we can see, tokens and coins, interacting together, form an innovative and decentralized financial environment with many potential applications. In the process, an environment is created where users are given complete freedom and confidentiality in financial transactions.
Our approach to tokenomics opens the door to a variety of options, including but not limited to DeFi decentralized financial services, where users can borrow and lend, participate in liquidity, and generate income.
Vladimir Okhotnikov: Can a token become a coin?
When a project develops and becomes more popular, sometimes they switch to their own blockchain and create their own coin. But this is not always the case and it all depends on the circumstances.
For example, the Binance exchange, which previously used the Binance Coin token, launched its own main network and the BNB coin circulating in it. After the migration, token owners were left with the opportunity to continue using tokens. For this, a so-called “bridge” was created, which supported the exchange of old tokens for new coins.
- “It is impossible to transfer cryptocurrency from one network to another due to the fact that each blockchain works differently and has its own rules. It’s like trying to use the key to one door to open everything. This is because different blockchains have their own ways of storing and processing transactions, and they do not directly understand each other. Therefore, in order to transfer coins or tokens, you need “bridges” that allow them to “talk” to each other…”
It is important to note that some coins may be represented as tokens on other networks. For example, Ethereum is represented as a token on the Binance Smart Chain blockchain. The same applies to Bitcoin which can also be used in other blockchains.
Therefore, technically, the token will always remain as it is and can never become a coin.
Why do people keep talking wrong?
Vladimir Okhotnikov aka Lado said that the substitution of concepts is unacceptable, but sometimes a token is replaced with a coin to simplify the perception of information.
It is worth remembering that the ability to only distinguish coins from tokens does not ensure financial success. Understanding the differences between meme tokens and tokens that have value due to technology also helps a lot.
If you want to know more, read the article about what mistakes crypto enthusiasts make at the beginning of their journey. After that you will understand what is important and what you should never do before buying a particular crypto.
