Currencies – a fundamental difference

With each day there are more crypto currencies and with each of them comes another candidate for the “new Bitcoin”. But do all crypto currencies really want the same thing? A brief introduction to the world of coins and tokens.

Crypto currencies have arrived in the Bitcoin loophole

The chance to get rich through an investment like this has now become the stuff of a rap song and the social media are also full of questions about “which coin is now the most worthwhile”. This mood on the market leads to Bitcoin loophole review crypto currencies being valued primarily on the basis of market capital. Accordingly, newcomers wonder whether Ethereum/Ripple/IOTA/EOS/TRON could soon replace Bitcoin.

In this article it concerns less a defense of Bitcoins than a sensitization concerning the considered crypto currency. After all, individual crypto currencies, various ICO-sponsored projects and new hard forks are not simply about creating a token for gambling. If this were the case, we would find ourselves in the much-quoted bubble, because after all, all projects would be worth nothing.

Of pocket knives and saws – coexistence of the news spy

The current situation is reminiscent of last year, when the significant rise in Ethereum’s share price led to the buzzword “Is The News Spy a Scam? Read This Review Before You Sign Up!”: people were convinced that Ethereum would soon have higher market capital than Bitcoin. Some circles also went so far as to say that Ethereum was “the better Bitcoin”. It is often forgotten that different crypto currencies are often designed for the news spy scam different use cases.

Ethereum captivates by the possibilities of Smart Contracts: With the help of Smart Contracts on a blockchain, automated processes are not simply possible, but decentralized applications that can be monitored during runtime. The classic Open Source concept has been extended to include the idea of Open Execution.

One can imagine that Smart Contracts greatly extended the idea of the classic blockchain technology, as it is known in the case of Bitcoin. Accordingly, considerably more use cases are conceivable than that of a peer-to-peer currency. With Initial Coin Offerings (ICOs) described further below, such an application has met with a great response.

In a nutshell, one might think that Ethereum is better than Bitcoin, after all Ethereum makes much more possible. But is it always better if many applications are supported?

As a parable, the pocket knife could be compared to a saw: A Swiss Army Knife also contains a saw. Similar to Leathermen, these knives are tools that can be helpful in a variety of situations – and often fit in your pocket.

But even though pocket knives combine the functions of screwdrivers, knives, saws, bottle and can openers, these tools have not disappeared from the market because they are an addition for special applications and not a replacement.

The same can be said about Ethereum: Ethereum is not in competition with Bitcoin, but complements the ecosystem of Blockchain technology. Accordingly, both currencies can exist wonderfully side by side.

Currency and token – ça fait deux
If primarily the monetary value is considered and all investment remains on exchanges, the difference between crypto currencies and tokens becomes blurred. Also on coinmarketcap tokens are displayed together with crypto currencies in the default representation. Nevertheless, tokens are named as such on coin market caps and “coins” and “tokens” can be viewed separately. The difference is important because it can also help in the fundamental evaluation of an investment and in the technical classification of a project.

We speak of a crypto currency when it is a stand-alone solution, i.e. when it is a separate blockchain or a blockchain-like data structure. The protocol on which these crypto currencies are based may be based on another crypto currency, but the previously existing crypto currency only serves as a role model. To put it more concretely: Litecoin or Bitcoin Cash can exist independently of Bitcoin, on whose code both protocols are based, and do not need Bitcoin. An ecosystem of nodes, miners (if consensus is found on the basis of proof-of-work), developers and regular users forms around individual crypto currencies.

Unlike crypto currencies, tokens cannot exist without an underlying crypto currency. They exist, for example, on the Ethereum block chain