In the crypto currency world there are coins and tokens. What are the differences between them and how does this effect our investing?
A Coin is a crypto currency that can operate independently. Coins have miners who create a block chain for the coin based on rules. Coins are rewards for work of mining originally and then are traded on markets. An alt-coin tends to be a copy of Bitcoin that runs independently. Some alt-coins are platforms for tokens.
A Token is a crypto currency that depends on another crypto currency as a platform to operate. Tokens are just created on a platform and sold by the creator on the market (like your ICOs). Tokens are being restricted by the SEC because they are basically securities to a project/ company.
What does this difference mean for investing?
I think that it is a good idea to limit your investing in tokens. When they start out, one person or group owns all of the tokens. Can they make more tokens and increase the supply? What is the community trying to accomplish? Are you prepared for the project to fail or be subject to fraud?
With coins, there is usually a maximum amount to be released, a current amount circulating and others should be mining the coin which means more than one person or group owns the coins. People can buy and sell at the price that they decide. There are still some coins that have shady beginnings, so you still need to be cautious.
A good rule of thumb might be to hold 50% to 90% in Bitcoin and spreading the rest into altcoins and ICOs.
List of Tokens: