What is the difference between a cryptocurrency and a token?

Cryptocurrencies and tokens are both digital assets used within the blockchain ecosystem, but they have distinct differences in terms of their creation, functionality, and use cases.

### Cryptocurrency

1. **Definition**:
   - **Primary Blockchain Asset**: Cryptocurrencies are the native digital currencies of a specific blockchain. They are built from the ground up on their own independent blockchains.

2. **Examples**:
   - **Bitcoin (BTC)**: The original cryptocurrency, operating on its own blockchain.
   - **Ethereum (ETH)**: The native cryptocurrency of the Ethereum blockchain.

3. **Functionality**:
   - **Medium of Exchange**: Used for transactions, payments, and as a store of value.
   - **Network Security**: Often used to incentivize network security through mechanisms like mining (Proof of Work) or staking (Proof of Stake).

4. **Blockchain Infrastructure**:
   - **Independent Blockchains**: Cryptocurrencies operate on their own blockchain networks. For example, Bitcoin operates on the Bitcoin blockchain, and Ethereum operates on the Ethereum blockchain.

5. **Examples of Usage**:
   - **Transaction Fees**: Paying for transaction fees on the network (e.g., gas fees on Ethereum).
   - **Incentives**: Rewarding miners or validators for securing the network.

### Token

1. **Definition**:
   - **Secondary Blockchain Asset**: Tokens are digital assets created on top of an existing blockchain platform, typically through smart contracts.

2. **Examples**:
   - **ERC-20 Tokens**: Standard tokens on the Ethereum blockchain, such as USDT (Tether) and LINK (Chainlink).
   - **ERC-721 Tokens**: Non-fungible tokens (NFTs) on the Ethereum blockchain, used to represent unique digital assets.

3. **Functionality**:
   - **Utility Tokens**: Used to access or pay for services within a specific application or ecosystem (e.g., Basic Attention Token (BAT) in the Brave browser).
   - **Security Tokens**: Represent ownership in an asset or company, similar to traditional securities.
   - **Governance Tokens**: Provide holders with voting rights on protocol changes or project decisions (e.g., Uniswap's UNI token).
   - **Stablecoins**: Pegged to the value of a fiat currency (e.g., USDC, DAI) to provide price stability.

4. **Blockchain Infrastructure**:
   - **Dependent on Existing Blockchains**: Tokens are issued and managed using smart contracts on an existing blockchain (e.g., Ethereum, Binance Smart Chain, Solana).

5. **Examples of Usage**:
   - **Decentralized Applications (DApps)**: Tokens are often used within DApps for various purposes such as payment, access to services, or incentives.
   - **Token Sales and ICOs**: Fundraising mechanisms where new projects issue tokens to investors.

### Key Differences

- **Independence**: Cryptocurrencies operate on their own blockchains, while tokens rely on the infrastructure of an existing blockchain.
- **Creation**: Cryptocurrencies require the development of a new blockchain, whereas tokens can be created relatively easily using smart contracts on an existing blockchain.
- **Use Cases**: Cryptocurrencies are primarily used as digital money and for network security, while tokens have a broader range of use cases within specific applications, including utility, governance, and representing assets.

In summary, cryptocurrencies are the foundational digital assets of blockchain networks, serving primarily as a medium of exchange and store of value. Tokens, on the other hand, are versatile digital assets created on existing blockchains, designed for a wide range of applications within decentralized ecosystems.