A Crypto Primer: Currencies, Commodities, Tokens

Posted by Hicks Crawford on February 11th, 2023

Cryptocurrencies are often filled with technical jargon, which can be confusing for investors. To help them get a better understanding of this market, we need to do some detective work and dig deeper into the meaning behind terms such as "asset," "wallet" and "miner."Cryptocurrencies, crypto tokens, and crypto commodities are three terms that are often used interchangeably. However, each term has a different meaning.

Cryptocurrency valuation is derived from a coin's success in adhering to the characteristics of money. Crypto token valuations depend on a different set of factors such as protocol adoption and robustness. Following are the differences between cryptocurrency, crypto tokens and crypto commodities.

Cryptocurrency

Cryptocurrencies, which are virtual coins that fulfill the functions of standard paper money, present oneof the most exciting investment options in today's markets. Cryptocurrencies include Bitcoin and Ethereum, which are used for transactions. Cryptocurrencies are tracked using frameworks such as supply schedules and traction for the said coin. Altcoins refers to all other cryptocurrencies except for Bitcoin and Ethereum.

Crypto commodities

The term crypto commodity is used to describe various tradable or fungible assets. Generally, the term is used to describe a tradable or fungible asset that may represent a commodity, utility, or contract in the real or virtual world through exclusive tokens on a blockchain network. Some consider blockchains used for generating tokens as crypto commodities. Others have defined crypto commodities in terms of a computer system's characteristics, such as CPU power.

In both instances, however, crypto commodities are defined as building blocks for cryptocurrencies.Crypto commodities may be valuable because of their rarity, which can be defined as "a commodity whose supply is limited or scarce." For example, computing power and storage capacity are considered crypto commodities. Another example is Ethereum's blockchain because it is used as a building block to generate smart contract tokens.

Several large organizations have come together to form an Ethereum Enterprise Alliance (EEA) to establish a framework and common technology that will allow developers to build apps using its blockchain.

Crypto tokens

Crypto tokens are similar to cryptocurrencies in that they are built on a blockchain. Cryptocurrencies are the most common form of tokens. But crypto tokens are broader representations of a blockchain's value. That value is manifested across a diverse range, from cryptocurrencies to loyalty points to assets built on the blockchain.

Coin prices

Coinlore is a free cryptocurrency price-tracking app. The app provides direct access to the latest cryptocurrency prices and charts, as well as additional information on markets, volumes, and historical prices. Coinlore gathers data from different sources to make sure they cover all necessary data or events.

Conclusion

Cryptocurrencies, crypto commodities, and crypto tokens are different entities that differ in the way they function. Cryptocurrencies are often used interchangeably in news articles and interviews but actually differ from crypto commodities and crypto tokens in important ways.