- Most people confuse cryptocurrencies with crypto tokens
- Cryptocurrencies have their own blockchain, whereas crypto tokens dont
- Tether is a crypto token built on top of open blockchain technologies
As more people across the world are warming up to investing in cryptocurrency, it is important to keep oneself abreast of the various terms that define the ecosystem. Given that cryptocurrency is a relatively new mode of financial transactions, it is easy to get confused with constantly emerging information about digital assets. One common error that most people make is confusing cryptocurrency with crypto tokens. While they may appear similar and are an intrinsic part of the crypto markets, they are different from each other. Both are digital assets, however, cryptocurrencies have their own blockchain. Meanwhile, crypto tokens are built on an existing blockchain.
Here are some popular crypto tokens that you should know about:
Tether is a crypto token that is “built on top of open blockchain technologies.” By doing so, it leverages the security and transparency that open blockchain technology provides. It converts cash into digital currency and is a stablecoin. Stablecoins are linked to an asset, most popularly the U.S. dollar, which are not volatile in nature.
2. U.S. Dollar Coin
U.S. Dollar Coin (USDC) is an Ethereum-based stablecoin. The crypto-token was launched in 2018. USDC is popular among investors and traders as it is moved across various cryptocurrency exchanges and platforms.
3. Uniswap (UNI)
Uniswap is popular among crypto traders for its ability to facilitate the automated trading of decentralised finance (DeFi) tokens. The website claims that “it eliminates trusted intermediaries and unnecessary forms of rent extraction, allowing for fast, efficient trading.”
4. Binance USD
BUSD is a 1:1 USD-backed stablecoin and is a popular digital token given its approval by the New York State Department of Financial Services. In addition to being used in wallets or exchanges, it can also be used as collateral and loan assets in selected scenarios.
5. Wrapped Bitcoin
Wrapped Bitcoin is a digital token version of Bitcoin. It runs on the Ethereum blockchain. Its prices are pegged to Bitcoin at all times as it is backed by Bitcoin at a 1:1 ratio. It also allows traders to transfer liquidity between Etherum and Bitcoin. This transfer is enabled by Wrapped Bitcoin in a decentralised and autonomous manner.