What Is the Difference Between Crypto Tokens, Currencies, and Commodities?
The world of cryptocurrencies is awash with technical jargon. As a result, several words are often used interchangeably without much thought to their meaning. This can become problematic for investors interested in understanding and putting money into the crypto market.
Cryptocurrencies, crypto tokens, and crypto commodities are, perhaps, the most misunderstood troika of words. One stands in for the other in interviews and discussions. But all three mean different things. That difference becomes important within the context of establishing a valuation framework for investment. For example, cryptocurrency valuation is derived from a coin’s success in adhering to the characteristics of money. On the other hand, crypto token valuations depend on a different set of factors, such as protocol adoption and robustness.
Here is a brief primer on the differences between cryptocurrencies, crypto tokens, and crypto commodities.
While there is some debate as to what constitutes crypto commodities, in general, 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