What is the difference between a token and a coin in the example of Binance Smart Chain?

Many of us are wondering what is the difference between a token and a coin and what is the best choice when starting a startup. In this article, we will not dive into technical details but focus on these two tools' purposes, advantages, and differences.

As described in the previous article (Will Crypto Replace the Banking System? And When? ), any digital currency, be it a token or a coin, is a tool for investing in a company, on the one hand, and a tool for raising funds, on the other hand.

So what is the difference between these tools and which tool is better to choose when launching a startup focused on attracting crypto financing?

What is the difference between a token and a coin in the example of Binance Smart Chain?
To quickly explain the difference between a crypto coin and a crypto token, you can compare them with banks that are familiar to everyone. If you create your coin, then you create your bank, if you choose a token, then you create your branch of this bank. Of course, any enthusiastic founder of a company in a wide range from a newly created startup to years of existing and booming business will immediately choose to create a bank, that is, create their coin, believing that this is the minimum that their company deserves. Will this decision be correct and what follows from such a decision? Let's look at this issue in more detail.

Both a novice entrepreneur and a businessman with years of experience must understand that business is not just doing some kind of activity, but it is also a responsibility for your employees and a constant movement to improve the goods and services that you offer to your customers. That is why, when creating a business, an entrepreneur focuses on some specific tasks that his business must solve. That is why, for example, when creating a logistics company, the owner develops a cargo delivery network, taking into account its cost and speed of delivery, but does not turn to the creation and production of its cars, choosing from the already existing variety of car manufacturers.

That is why for most businesses it is necessary to choose a token as a means of obtaining funding. That is why for most existing or start-up businesses there is no point at all in issuing their token. Let's explain these statements in more detail, starting with the last one. Why is there no need for most businesses, including existing businesses, but especially startups, to create their token? To clarify this issue, you need to understand what is the difference between crypto financing and standard startup financing. The main difference is the instantaneous receipt of funding after the listing of such a project.

But if the project has no idea how it will make a profit and has not yet thought about this issue at all, then when receiving funding with the help of standard accelerators and funds, a startup also receives organizational support and coaches who will guide the development of a young business. When receiving crypto funding, a startup instantly receives funding but does not receive any information about the further development of the business.

That is why even creating your token is redundant for most startups, as it creates an excessive load on the crypto infrastructure, especially on company personnel. Do you need your branch of a diner bank or a single bowling alley? Hardly.

A network with thousands of shops or cafes may think about creating a token, but it is not needed by a startup that does not understand its business and is maximally designed to sell a limited number of goods within a limited territory. A token should be chosen by an already mature company with an existing network or international business, or at least initially designed for such a business. As we said above, creating a token can be compared to creating your bank branch based on the coin of your choice, which is essentially the parent bank.

All these examples above will help you understand that even creating your token is a responsible step that not every company needs. After all, when servicing your business in a regular bank, you have a clear and reliable scheme for making your payments, so you can focus on running your business. Creating your token, you get need not only to take care of the business but also to organize the work of your branch of the bank, organize its activities, and solve a variety of technical tasks for the exchange of banking information between various structures of other banks. Does your business need to spend time on this, which will take up most of your time and will not allow you to develop your own business, for which you decided to devote your time to creating a token?

Only by delving into the questions described above and giving honest answers to them, you will be able to understand the difference between a token and a coin. The issuance of your coin can be compared without exaggeration to the creation of your bank. This gives not only some privileges but also an unimaginable number of responsibilities. The first of which is to support projects implemented on the tokens of this network and the implementation of a profit-making mechanism for conditional branches. This task belongs to the competence of the owners of the blockchain network and is currently not being implemented as it should. Why is this happening?

The crypto industry may have received too much attention lately. Perhaps the lack of regulation has attracted a huge number of different people and interest groups to the industry. Perhaps because the leadership of crypto companies was busy responding to requests from society, the media, politicians, and various institutions, instead of controlling their staff, where corruption and support for scammers extorting money for listing projects began to flourish. And most likely, as often happens in our lives, all these reasons together led to the current state of affairs in the crypto industry. None of the above participants in the crypto industry most likely wanted to cause damage to the crypto and did not pursue malicious intent.

Most often, evil happens by itself, happens because everyone thinks only about themselves, and not about others or the future of some crypto. But this approach inevitably leads to the moment when the whole industry is on the verge of collapse. And each of us needs to stop and ask ourselves questions. And most importantly, give yourself honest answers to them. Does my company need a crypto token if I understand that the token is like a bank branch? Do I need my crypto coin, if I understand that this is an analog of a whole bank? Is this what I am doing and focusing my attention on if I am an employee of a crypto exchange, which is essentially a federal reserve service and should resolve relevant issues?

The answers to these questions are simple and understandable to everyone if they care about the future of the crypto industry. Not every company needs a token. Excessive attention to crypto hinders the development of the industry and makes its continued existence doubtful. The owners of coins and individual forks of digital currencies should create mechanisms for monetizing their solutions, which will help maintain the infrastructure of digital currencies and their further performance.

Token owners should not think about token monetization, but should think about their projects. If you do not know and do not even imagine how exactly you will monetize your project, then you are better off turning to standard financing from venture funds or accelerators that will help you build a monetization mechanism and find your niche. Exchange owners should build relationships with coin owners and ensure that the costs of the exchanges are covered by operating token projects, and not demand payment from the project that issued the token. In this case, exchanges will be interested in the success of crypto projects, owners of cryptocurrencies will provide infrastructure support and monetization of the entire network of a given coin or blockchain fork, and central crypto exchanges will act as central regulators.

It’s time for all crypto developers to stop making mistakes and create bridges and protocols that are designed to correct previous mistakes and create new exchange protocols between previously incompatible networks. This process can be called a perfect example of human inexpediency and occupation for the sake of occupation. Sorry, gentlemen, and developers, but this is true, even if you are sure of the opposite. After all, instead of laying down mistakes and "crutches" that will support them, you can focus on creating something necessary, large, and meaningful. For example, aething applications, don’t consider them advertising, but I don’t see the best solutions for today.

Only in this case, it is possible to begin to develop the crypto industry and introduce it into the real sectors of the economy and everyday tasks of the real, not the virtual world. Only in this case development is possible, and not stagnation and collapse of the crypto industry, which is now moving by leaps and bounds. In this way, crypto will cease to create enemies for itself with its own hands and begin to create what it was created for, to create and maintain trust between people. We hope that we have answered the question of what is better to choose - a token or a coin. First, you must choose crypto and take steps to create its future, not destroy it. And give yourself honest answers to the questions above. And then the question regarding the choice of a coin or token and the need for it for your company will become crystal clear and understandable for you.

Good luck with your projects!

Sincerely,
CEO Aething Inc.
Ihar Kul
May 09 / 2023
Text author: Ihar Kul



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