In the crypto world, when we talk about so-called 'digital assets', we almost always refer to two specific assets:
- Cryptocurrency
- Tokens
Many media channels use these terms interchangeably and do not properly explain what exactly the differences are. For although they both use the blockchain (read more about it here blockchain and real estate), there are differences between crypto and tokens. In this article, we will take a closer look at the token meaning and we will explain the exact differences. Do you want to know more? Then also read the other articles on our blog.
Why tokens and crypto are so similar
Crypto tokens and crypto coins are very similar. This has everything to do with the fact that they use a specific blockchain protocol. Where ETH is the token of the Ethereum blockchain, this protocol also has for example DAI more of a token.
In essence, both crypto and tokens:
- Both decentralised
- Both can be used to store value and trade value with others.
- Both use digital signatures to approve transactions.
Although there are many similarities, it can be argued that this is mainly because of the underlying technology that both use. There are also significant differences:
How tokens and crypto differ
The main difference is that a crypto currency is an inherent part of a blockchain, whereas a crypto token uses the protocol through smart contracts. There is no central authority controlling the entire system, it works through predefined network protocols.
In practice, we notice this particularly in the application of these two different technologies. Whereas crypto remains mainly a question of tradable coins, tokens can also be linked to actual objects. For example, tokens are often used to record and change the ownership of works of art. The blockchain proves who the current owner is and can change this when a transaction is put into motion. Read more about it here blockchain and real estate.
We at Immotokens use it in a new but proven way: the shared ownership of real estate. Investing in real estate is often pricey and not for everyone. But complex regulations make it impossible to own a house with 100 other people through a traditional contract. And this is where our real estate tokens involved. By recording the properties, we can distribute a property among many people. They are then paid proportionally each month from rental income and ultimately from the sale. Even with a limited budget of only €50 someone can invest in real estate.
