Assuming that your first steps were not only with us worshipping to our guide, we believe that you heard about Coins, Tokens, and Altcoins. We already explained to you what altcoins are, short for alternative cryptocurrencies. A vast realm of altcoins has been developed around the creation of Bitcoin, and we can differentiate two categories of altcoins, the Coins and the Tokens.
P.S.: you might read the term « shitcoin » quite often on social media. This term defines altcoins in general and sometimes even Bitcoin by most cryptocurrencies skeptical people. Overall, this term is not as mean as it seems.
All the altcoins are treated like cryptocurrencies, even if a lot does not meet the requirements to be called currencies.
The majority of coins are forked from Bitcoin. A fork is a variant of the Bitcoin open-source blockchain, with minor changes and a different set of features. The most obvious example to explain this statement is Litecoin. Litecoin differs from Bitcoin in aspects like faster block generation rate and use of scrypt as a proof of work scheme. Litecoin has a set of different economics and a quicker blockchain.
Some of the coins are not forked from Bitcoin but use their original Blockchain and protocol. Bitshares is a decentralized platform allowing Decentralized Exchanges to perform asset exchanges without the need for a centralized authority. BTS, their native token, is the coin running on the Bitshares platform.
Contrarily, tokens are assets that reside on the top of another blockchain. Tokens are quite easy to create since they do not require any change of code. The Ethereum blockchain allows you to create tokens, called ERC-20. This functionality is possible through the use of smart contracts.
When a company creates new tokens, they will distribute them to the public through an Initial Coin Offering (ICO), or an Initial Exchange Offering (IEO). This process is equivalent to crowdfunding. We will explore those new terms in the next chapter.