cryptocurrencies tokens coins assets I
know you’ve heard all of that terminology and I bet you have been
wondering what the difference is between all of them are today I’m gonna be
explaining the difference between all of that terminology I’m Limore and I’m
gonna show you how to crush it with your finances come on this will be fabulous it can be so confusing to understand the
difference between tokens and coins and assets and currencies and today my goal
is to explain to you a little bit about how it works and how to be able to
decode and tell the difference because a lot of them are used interchangeably so
the best way for me to be able to explain this to you is actually in 2
various dimensions the first one is going to be structured through the
technology and how these various elements are actually built and
constructed and the second one is going to be around how we actually use it so
let’s dive in the first one is around how the technology is created so in
reality there’s basically if I were to really simplify this two main ways that
these types of elements are created the first one is coins and the second one
is a token and let me explain the both coins and the way that they are built
are based on their very own blockchain they tend to have their own rules their
own protocol their own sort of strategy behind how they were created and I might
even go so far as to say that a coin actually is almost an entity unto itself
and so examples of coins are things like Bitcoin or litecoin or etherium but
etherium is actually a little bit of a tricky one because there’s a couple of
different elements to it so I’ll touch back on that throughout this video but
when you think about all of these coins they really are distinctly separate and
one of the elements that’s really important to understand is that they
actually all have their own blockchain I know sometimes we just kind of say oh
the blockchain but there’s actually lots of different the blockchains and so each
of these coins are actually built to live as a separate component on its own
separate blockchain and these are a little bit more complicated to be able
to develop and create now the second one is called a token now a token is
actually from a technology standpoint built on somebody else’s
blockchain so they’re leveraging some existing technology and to be able to just
overlay elements and kind of the easiest way for me to explain this or how I like
to think about it is kind of like YouTube of course here we are on YouTube
is that I can have my own channel you can have your own channel and everybody
who creates content on YouTube has their very own channel but they’re not
recreating YouTube onto itself so if you think about the coins that would be like
a separate YouTube but if you think about a channel it leverages the
structure that YouTube already has so in the same way token leverages the
blockchain of somebody else one of the most popular ones is etherium now not to
be confused because they have their own coin called ether and they also have a
platform with technology spec that a lot of developers use called ERC 20 and
that’s essentially where a lot of the tokens are actually created or based
upon now as a result of that you can probably imagine that there’s way more
tokens than there are coins out there but there’s definitely a ton of both and
as I mentioned earlier creating a token is far simpler because you’re already
leveraging the blockchain that’s in place
so to recap so far from a technology standpoint we basically have coins and
we have tokens within the usage component of all these elements it can
be really convoluted it can be really confusing because there’s a lot of
interchange words or different understandings of what these mean and so
let me explain them now there’s three that I’m going to be going over and the
first one is of course currency currency currency currency we
hear that all day long and essentially with a currency one of the most common
views out there is that you use the word currency for a transaction so if I’m
going to take some of my crypto that I’ve got and I’m going to trade it or
I’m going to barter it for a good or service well then that’s the definition
of a currency right there’s going to be some
transaction now anytime you’re transacting which means you’ve either
got a coin or you’ve got a token and it represents an element of value and
you’re switching it for your product or your service that’s when you can be
called a currency and that’s one of the most common views of cryptocurrency out
there now I would be remiss if I didn’t also acknowledge that on the other side
of the coin no pun intended of the cryptocurrency
debate there is a school of thought that really just thinks that currency is more
as storage of value and that’s really essentially thinking that you know when
you go to the store and you’re gonna buy milk or you’re gonna buy eggs yeah
you’re transacting but the storage of value is really more about the value in
the background so let’s say for example like gold gold could be the value you’re
not gonna take that gold and go to the store and buy your milk and buy your
eggs and buy your bread but you’re gonna use that gold in order to be able
to accumulate your wealth may be personal wealth generational wealth and
so yeah there is a sentiment out there that you know currency is really for
holding for the long term and for creating wealth I’m not here to say it
what’s wrong or what right but you know some of the way that I’ve been using the
terminology is really that currency is about the transaction so as I mentioned
already currency because you’re trading for value it can either be a coin or it
can be a token now the second usability or way that you can use these is called
a token or a utility token and so this is often used when you have sort of
access to a particular type of platform where you need to have that kind of
token to enable you to get in a front door to be able to use it so at a very
simplistic level if I were to create I know
Limor’s gaming arcade and in order to play all of the video games in my arcade
you need to have the Limor token well there would be some value around the
Limor token and you need to be able to have that if you want
come to my gaming arcade and be able to play or be able to participate so that’s
a simplified example but there’s many out there where you need to have the
actual token in order to gain access to participate to get the app or whatever
the activity is that you may need to do so typically a token is a token now the
third one is an asset or a crypto asset and so this is typically used when there
is an actual asset in the background again it may be gold but in this
particular example to make this really fun and easy let’s talk about jelly
beans so let’s say that I’m creating a million coins that correspond to a
million jelly beans and each coin is connected or has the value of one jelly
bean now that value could go up where that value could go down but if there’s
only a million coins and there’s only a million jelly beans well there’s a
representation of a 1 to 1 value and so essentially when you hear about crypto
assets there’s usually some sort of asset in the background now with this
sometimes there’s challenges regarding trust because you know if you and my
example wanted to have a coin that was equivalent to one jelly bean it may or
may not be easy for me to prove that I have a million jelly beans and secondly
if you wanted to convert that coin or trade it in for the actual jelly bean
that may or may not be an easy thing to do so know that this does exist
particularly in commodities but I have seen a whole bunch of other examples as
well and again in the same vein as the currency a crypto asset can actually be
from a technology standpoint either a coin or it can be a token a question
that I’ve been wondering about and maybe you’re wondering about as well is is
there going to be a winner is there going to be one currency or
coin or token or asset that’s really going to be the frontrunner in terms of
where we go and the one that becomes maybe of the highest usage
and to this I actually got a really great answer from a friend of mine Steve
who actually said that there isn’t only one currency so why would we ever get to
a place where we have one cryptocurrency and I agree with him I think that’s a
really good point that we’ve already got a ton of currencies already by country
by geographic region and we do just fine with multiples so it’s not necessarily
about having one winner but having what we need in order to be
able to achieve our outcomes or achieve the transaction that we’re looking to
get to so in conclusion if you’re looking to understand what is the point
of all this essentially what you really want to focus on is what is your desired
outcome what are you looking to do with your coins or tokens or access or
currencies and just really ensure that what it is you’re trying to do whether
it’s gain access or barter for products or services you can in fact do with
either the coin or the token that you are thinking of buying or acquiring or
the ones that you already have if you are considering putting your money into
either an ICO or a new project or you know maybe even an existing one it’s
important for you to really understand from an evaluation standpoint what is
its background what is its technology what is its functionality especially if
you’re looking to hold for a longer period of time you want to make sure
that it’s one that is viable and really just meets all of your needs I hope that
this helps even though in reality the majority of us are interchanging these
words all the time but at least you’ll know in the back of your mind what they
actually mean and the purpose and the utility behind them so if you like this
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will put up the next video as always if you have questions if you’ve got
comments if you got feedback if maybe you’ve got an insight that I didn’t
mention here today that is worthwhile sharing with other people I would love
love love if you share it in the comments below and as always if you’re
looking for more tips and tricks to help you with your finances
come on over to Limor.money I’ve got lots of great resources for you
there remember I’m not gonna change who you are or how you live your life I just
have strategies to make you even more financially fabulous thank you so much
for watching and I’ll catch you next time till then stay fabulous