Crypto Coin vs Crypto tokens. Although these words sound very similar they have huge difference. To understand them, let us take an example of car. If you want to own a car and have sufficient money then you can buy it or if you don’t have then rent it from someone else for a period of time. Coins and tokens works the similar way. A Crypto coin operates on its own block chain where it records all the transactions. Whereas the token doesn’t need it’s own blockchain rather it works on other block chains.
Token work by smart contracts, which are basically codes that allow the tokens to do transactions like payment to users etc. Each block chain uses its smart contract. For example, Ethereum has ERC-20 smart contract while NEO uses Nep-5. An example of using the team using the Ethereum block chain to create their own token and using it is Brave browser. The creators created a Basic attention token with the purpose of better solution to digital advertising. The basic idea is that this makes ads more customer centric rather than brand centric. Users will only see those ads that they want and earn the token. So basically you get paid in token to see the ads you want to see.
These crypto token can basically be categorized into 5 types
Platform tokens- Supports Dapps built on blockchain
Security tokens- represents legal ownership of a physical and digital asset
Transactional token- serves as unit of account and are exchanged for goods and services
Utility tokens- they are integrated into the existing protocol of block chain and used to access services of block chain like payments
Governance tokens- fuels block chain based voting system