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Cryptocurrencies Are Digital Tokens That Are Created Quizlet

Cryptocurrencies and Digital Tokens: A Guide to the Digital Asset Landscape

Cryptocurrencies: The Digital Currency Revolution

Cryptocurrencies are digital currencies that leverage encryption to ensure secure and decentralized transactions. They operate on a blockchain, a digital ledger that records transactions chronologically and publicly. Bitcoin, the most well-known cryptocurrency, has gained significant value over the years, with its total value exceeding $12 trillion in April 2021.

Cryptocurrencies offer several advantages, such as:

  • Decentralization: They are not controlled by a central authority, such as a government or bank.
  • Security: Encryption ensures that transactions are secure and immutable.
  • Anonymity: Many cryptocurrencies allow users to make transactions anonymously.

Digital Tokens: A Variant of Cryptocurrencies

Digital tokens are a type of cryptocurrency that is based around a brand, community, or influencer. They represent a variety of assets, including:

  • Equity in a company or project
  • Access to exclusive content or services
  • Ownership of a digital collectible

Key Differences Between Cryptocurrencies and Digital Tokens

The key distinction between cryptocurrencies and digital tokens is their native blockchain. Cryptocurrencies are the native assets of a blockchain, such as Bitcoin on the Bitcoin blockchain or Ethereum on the Ethereum blockchain.

In contrast, digital tokens are created as part of a platform that is built on an existing blockchain. For example, the Ethereum blockchain hosts numerous tokens known as ERC-20 tokens.


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