Cryptocurrencies can be fun and exciting, especially when you know all the buzz words that are around.
Blockchain is a decentralized and secured database technology. It refers to literal chains of data linked together in so-called blocks. Cryptocurrencies (coins and tokens) are built using blockchain as their underlying database. It allows operations to be decentralized and facilitates instant and secured transactions. In short, blockchain keeps tokens safe and enables transactions with anyone, anywhere, in real time.
Circulating supply is the amount of coins or tokens that’s been mined or generated. It’s the approximate number that’s currently in public hands and circulating in the market.
Circulating supply does not include known project treasury holdings (which can be significant) thus it acknowledges that tokens may be held by projects/foundations which have no intent to sell down their positions, but which have not locked up supply in a formal contract. Circulating supply is the number that can change dramatically based e.g. on discretionary sales from project treasuries.
Coin vs Token
Coin or Token is a unit of value that a creator, artist or in general, an organization can create to self-govern its community, and empower users to interact with its products while facilitating the distribution and sharing of hottest content, rewards, airdrops, loyalty programs, raffles and other benefits to all Token holders.
On the CoinOn platform we try not to use the term Coin interchangeably with Token as there are different dynamics behind both of them. In some places it may happen though since the platform allows creators to create both of them.
For example, in the Coin Creator, where you can create coins that are either a type of Token or Coin. Coins are not real currencies like Dollar (USD) or Euro (EUR) but more likely utility tokens for you and your community. The difference between them is very slight.
- Coins are usually “native” to their particular blockchains. Some of examples of a native cryptocurrencies include Ethereum, Bitcoin or Litecoin. On the CoinOn platform coins can be divided into fractions - for example, 0.001 Bitcoin.
- Tokens are bound to particular crypto coins on blockchains. There might be tokens available for example on Ethereum Network (which has a “native” ETH crypto coin).
Community tokens are a form of cryptocurrency that are linked to a particular community, company or an organization.
To better understand community tokens, we need to first go back to the definition of Community - it’s a group of people living in the same place or having a particular characteristic in common. In other words, it is a group coordinated around a common purpose. That purpose is what brings people together. It's the same with Community Tokens. The idea is that holders of a token can get perks from the issuer, such as special, exclusive content, access to closed groups, special forums, or digital merchandise etc. For quite a long time, a sense of community has been a big factor in the growing adoption and popularity of Bitcoin - the largest and most popular cryptocurrency as of 2021- after more than a decade since its creation. Thanks to CoinOn it’s possible to create community tokens without a hassle. You can try by using our Coin Creator.
A crypto wallet is a device or application that stores a collection of keys and can be used to send, receive, and track ownership of cryptocurrencies. Wallets can take many forms. A wallet might be a directory or file in your computer's file system, a piece of paper, or a specialized device called a hardware wallet. There are many smartphone apps and computer programs that provide a user-friendly way to create and manage wallets.
The Ethereum blockchain refers to an open-source, decentralized platform that stores transaction data as well as the smart contract code and state; it enables decentralized applications (also known as DApps) to be built on top of the Ethereum blockchain. Some examples of DApps include Uniswap, MakerDAO, and Cryptopunks.
Governance tokens are cryptocurrencies that represent voting power on a particular, affiliated blockchain project. As of recently, they are mostly integrated into DeFi projects since they need to distribute powers and rights to users in order to remain decentralized.
The maximum supply of a cryptocurrency refers to the maximum number of coins or tokens that will be ever created. This means that once the maximum supply is reached, there won’t be any new coins added, minted or produced in any other way.
Usually, the maximum supply is capped by the limits defined strictly by the underlying protocol of a digital asset. Maximum supply and issuance of new coins can be defined at the genesis (very first) block of the blockchain.
Setting a steady issuance rate together with a predefined maximum supply can be however valuable for controlling the inflation rate of a coin, which may potentially lead to a long-term appreciation of the asset. In general, when the maximum supply is reached, there will be fewer coins available on the market to buy. This is expected to create market scarcity, which may eventually lead to deflation conditions (or 0% inflation rates).
To explain scam coins we firstly need to clarify the term Scammers - those are people, who look for ways to take your funds off you. There are many methods to prevent them from doing so. It’s worth noting, it’s not always possible to stop scammers entirely but it’s possible to make them less effective in what they do. Apart from many technical advancements and protections that we introduce to the CoinOn platform, it’s important to see some common patterns and techniques used by the scammers. Scam coins are tokens created & used by scammers to get your funds. There are several ways to prevent scams. We discuss more about them in the Security section.
Sidechains can be independent blockchains, such as the Ethereum or Bitcoin blockchain. They can be also dependent on each other - you can think of it as a parent-child sidechain. Sidechains can operate independent of the mainchain with their own transactions, security, and governance rules. They are designed to be compatible with their main (parent) chains. It all allows users to exchange tokens between the chains. For example, if you have Bitcoin currency (BTC), however you want Ethereum currency (ETH), then you can exchange BTC for ETH via the BTC-ETH pair. Sidechains may be a bit less decentralized, but they have a very good compatibility with main chains.
Social tokens are a form of cryptocurrency that represents a brand, individual, or community. The exact utility of a social token can vary depending on a use case, a network and/or a creator that it represents. On CoinOn Platform we also refer to them as Creator Coins, Community Coins, or Community Tokens. These terms are used interchangeably.
Stable coins are cryptocurrencies or tokens that are backed by fiat currencies like dollars, precious metals (e.g. gold or silver), and even other cryptocurrencies like Bitcoin. They are called “stable” due to their lower volatility (price doesn’t change that much compared to “standard” coins).
As mentioned before, the calculation of maximum supply includes all coins or tokens that were already produced (added or mined) and the coins that are yet to be issued (in the future). On the other hand, the total supply includes only the coins that were already produced minus the units that were destroyed (burned), for instance, in coin burn events. It also includes reserved (locked) coins or tokens. Total supply is normally equal or greater than the circulating supply.
Total Supply = Circulating Supply + Coins to be added - Burned coins