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You've likely come across the term "token" in your crypto ventures, or heard Bitcoin and Ethereum described as a token, but what does this all mean? In this article, we're breaking down what a token is, and how to distinguish a coin from a token and how it can be used as a tool to store value.

Token Definition

A token, in the cryptocurrency sense of the world, represents a particular asset or utility. It's worth noting in this item that tokens and cryptocurrencies are terms often used interchangeably however they technically differ. Tokens typically fall into one of the following three categories:

Payment tokens

These tokens allow users to purchase goods and services outside of the blockchain, offering an alternative currency. 

Security tokens

Similar to initial public offerings (IPOs) on the stock market, security tokens offer users an ownership stake or entitle the holder to dividends in a blockchain project. 

Utility tokens 

Utility tokens offer users access to a service within a particular ecosystem, similar to loyalty points on a Starbucks card. These points hold value within their own ecosystem but cannot be used outside of that. ‍

Coins vs Tokens

Getting more technical, when exploring coins vs tokens, tokens are categorised as crypto assets that have been built on top of another blockchain while coins are built on their own blockchain. 

Ether, for example, is the native token to the Ethereum blockchain, however, the platform allows developers to create a range of token standards on top of it. Based on this information, all ERC-20 tokens are therefore categorised as tokens as opposed to coins. 

USD Coin (USDC) and Tether (USDT) are therefore tokens as they are built on top of the Ethereum blockchain. While each network is operated by its own leadership, both use Ethereum's blockchain to facilitate all transactions.‍

How Are Tokens Traded?

Much like coins, tokens can be bought, sold and traded on exchanges, or sent directly from one wallet to another. This is facilitated by blockchain technology, in the same way that coins are transferred from one location to another. Unlike coins, which are all fungible in nature, tokens can sometimes be non-fungible, meaning that they are not identical in value and function. 

Tokens are sent using the wallet address of a recipient's blockchain-compatible wallet. The address is often represented by a barcode in the form of a QR code, or through a lengthy alphanumeric code. All transactions take place from the wallet holding the tokens and are sent directly to the wallet of the recipient without the need for a centralized authority like a bank. Tokens can typically be bought on exchanges, often with Visa or Mastercard, or exchanged between users.

How is an NFT Different from Cryptocurrency?

Non-fungible tokens (NFTs) are all different from each other as they each represent a real-world object, whether a digital piece of artwork or a bottle of fine wine. Bitcoin can be traded for anything around the world, whereas NFTs are unique in nature and while they hold value they cannot be used interchangeably. 

What Are NFTs Used For?

NFTs are used to represent a particular asset, whether it be physical or digital. When minted, these tokens will permanently represent that asset and cannot be changed. For example, one NFT could represent an apartment in London while another could represent a song by Kings of Leon. The possibilities are endless, and the marketplaces are huge.

Users can easily trade NFTs on marketplaces (through a website or mobile app) such as OpenSea or Rarible. Once you own an NFT you are credited with the ownership rights of the asset the NFT represents. Due to the nature of blockchain technology, this is permanently displayed on the network's public ledger for anyone to review. This process ensures that the ownership of an NFT cannot the changed and the information is available for anyone to credit.

Note that several blockchain networks currently support the minting of NFTs, and the holder will need a wallet specific to that blockchain in order to hold the NFT.

Are Tokens Regulated?

When it comes to regulation, countries around the world are currently drawing up legal frameworks to better implement cryptocurrencies into our current financial system. This includes the likes of tokens.

Once cryptocurrencies are regulated by government authorities, they could provide the world with unrealized use cases like being used to manage a prescription at a pharmacy or clinical services or to provide feedback to IT support. While there are plenty of tokens available on the market today, it's likely that this is only the tip of the iceberg in terms of their potential to improve issues faced around the world.

While the crypto industry continues to grow at a breathtaking pace, one problem continues to run wild. That problem is the fact that blockchains are not interoperable, meaning that they can only exist in their individual nature. Polkadot set out to change this, creating a network that aims to connect multiple blockchains in one simple solution. As a direct competitor to Ethereum, the blockchain network has a different structural approach.

What Is Polkadot (DOT)?

Polkadot is a blockchain network created by one of the Ethereum founders. Through the use of intricate architecture, the platform aims to connect multiple networks through their relay chain and parachain system (more on this below). 

Similar to Ethereum, developers can create their own decentralized apps (dapps) and smart contracts on the network. Referred to as a sharding multichain network, Polkadot aims to provide a platform on which developers can build multiple blockchain networks off a common standard. Traders can then trade a range of products built on the network, similar to how ERC-20 tokens are traded.

Who Created Polkadot?

Founded in 2016, Polkadot was created by one of the Ethereum co-founders, Gavin Wood, alongside Peter Czaban and Robert Habermeier. Woods notably created the Ethereum language Solidity, which allows developers to create dapps on the Ethereum network. 

Wood is also the founder of Parity Technologies and the president of Web3 Foundation. Web3 Foundation is a Swiss foundation that was designed to facilitate a user-friendly, open-source decentralized web. The company's approach to crypto is one of its kind and sets it above any other competitor.

How Does Polkadot Work?

As mentioned above, Polkadot utilizes a relay chain and parachain system. Each parachain is a blockchain in itself, however, they all rely on the relay chain to facilitate transactions. These blockchains work in a "parallel" manner (hence the name) and can each hold their own tokens and individual use cases. The relay chain provides blockchain support to the parachains on the network.

Finalizing the transactions and being responsible for maintaining network security, the relay chain is able to facilitate 1,000 transactions per second (TPS). Utilizing a hybrid consensus mechanism, the enterprise network has created proof-of-stake (PoS) and a nominated-proof-of-stake (NPoS) model. 

Through this variation, anyone can stake DOT in a particular smart contract and perform network roles such as being a :

• Validators (validate data in parachain blocks, vote on network changes)
• Nominators (select validators by delegating their staked DOT to them)
• Collators (nodes with full histories of each parachain, that transfer this information into blocks for the relay chain)
• Fishermen (responsible for monitoring the network and reporting bad behaviour to the validators)

These four roles allow Polkadot to have a highly sophisticated user-driven governance system as each role contributes to maintaining and securing the network while eradicating bad behaviour. 

The network is working on a third blockchain functionality known as a bridge. Bridges will allow blockchains on the Polkadot network to interact with "outside" blockchains, essentially allowing tokens to be swapped directly without needing to go through an exchange. 

Through this intensive structuring, Polkadot aims to solve two problems that the blockchain network is currently plagued with scalability and governance. 

What Is DOT?

DOT is the native cryptocurrency to the Polkadot network and is used as a governance and utility token, allowing users to vote on proposed upgrades and used for gas fees. It plays an integral role in maintaining and operating the network. As a digital currency, it can also be used to execute cross-border transactions.

The platform was launched in 2020 and has already established itself in the top 10 biggest cryptocurrencies. 

Does Polkadot Have A Max Supply Cap?

To answer the question "what is the total supply of Polkadot" the answer is that there isn't one. The network opted to leave the total number of DOT infinite. At the time of writing the circulating supply was just short of 1 billion coins.

What Is The Difference Between Polkadot And Ethereum?

A common question in the crypto community, not just because they share similar use cases but also because the two networks share a founder. Both networks provide a platform on which developers can create their own blockchains, and following the launch of Ethereum 2.0., will both be using a PoS consensus. 

Structurally the Polkadot platform differs in that it makes use of parachains and a relay chain. This is a unique feat in the blockchain industry. Through this structure, the network aims to improve on several of Ethereum's functionalities and deliver a trifactor of governance, scalability and interoperability to the blockchain industry, without compromising security. 

How Can I Buy Polkadot?

If you're looking to incorporate Polkadot (DOT) in your cryptocurrency portfolio, look no further than Tap Global. A recent addition to the exchange's portfolio, users can buy, sell, trade and store DOT directly through the professional app. Whether looking to trade DOT for its technology and smart contract capabilities, or to tap into a new market, Tap allows traders to diversify their cryptocurrency portfolio in one secure location.

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Sitting among the 30 biggest cryptocurrencies by market cap, Stellar is focused on bridging the gap between the business of blockchain and the traditional financial institutions. The platform provides a means for users to send assets and money through the blockchain, utilising a decentralised network of authenticators.

Redefining the financial landscape, Steller presents a digital transformation on the traditional services users have become accustomed to. Merging innovation with a practical application, the network is able to help users around the world, as well as financial industries, achieve a more streamlined service. Let's explore what Stellar is.

What is Stellar (XLM)?

Before we dive into the "what", let's first stipulate that one stellar is known as a lumen and uses the ticker XLM. Stellar launched in July 2014 and soon afterwards changed its strategy to be more focused on integrating blockchain technology into financial institutions. 

The concept behind Stellar is to provide a space in which users can transfer everything from traditional crypto and fiat currencies to tokens representing new and existing assets, increasing their transaction performance by using lumens.

Similar to the Ripple XRP network, Stellar is designed to cater to both payment providers and financial institutions, building a bridge between the blockchain and traditional financial sector. Developing on the Ripple concept, Stellar has also positioned itself as an exchange as its ledger has an inbuilt order book that keeps track of all the assets on the network. 

Who Created Stellar?

The founders of Stellar are Jed McCaleb and Joyce Kim, both previously employees at Ripple. McCaleb, who founded and was acting CTO of Ripple, and lawyer Joyce Kim, decided to create Stellar after they left the Ripple team in 2013 following a disagreement on the direction that Ripple was taking. McCaleb is also credited with creating the first successful Bitcoin exchange, Mt Gox. 

McCaleb described Stellar's aim as giving people a means of moving their fiat into crypto and more seamlessly conducting international payments. The network provides cross border transactions with low transaction fees and fast executions. With leading technology and innovative problem solving, the network has made a healthy impression on both institutions and investors alike.

How Does Stellar Work?

Stellar is a hard fork off of the Ripple network with several similarities in design and functionality, however, the platform set itself apart by building in several key features. The platform is secured through the Stellar Consensus Protocol which revolves around these core business concepts: decentralised control, flexible trust, low latency, and asymptotic security.

The biggest upgrade launch came in 2015 when the platform replaced its consensus mechanism with a concept called federated Byzantine agreement. This required nodes to vote on transactions until quorums are reached. Anyone is able to join the consensus, and there are measures in place to inhibit bad actors operating with ill intent on the network.

The software behind the platform is called Stellar Core and can be altered to adhere to the needs of the operation using it. The nodes making up the network can be created to function as either Watchers, Archivers, Basic Validators or Full Validators. For example, watchers can only submit transactions while Full Validators can vote on which transactions are valid and maintain a ledger of all node activity.

Another element to the network is the Stellar Anchors. These gateways are responsible for accepting deposits of currencies and assets and issuing depictions of these on Stellar.

What Is XLM?

Known as lumens, XLM is the native cryptocurrency to the Stellar platform. XLM acts as an intermediary currency for transactions taking place on the network. With cost-effective experience priorities, every transaction on the Stellar network costs 0.00001 XLM, a fraction of a dollar (at the time of writing). 

When the platform launched in 2014, 100 billion lumens were minted, programmed to increase by 1% annually until the total supply reached 105 billion. Five years later the Stellar uses voted to end this process. 

That same year, in 2019, the Stellar Development Foundation (a non-profit organisation) reduced its share of XLM in order to regulate the Stellar economy. This brought the total supply down to 50 billion. At the time of writing, roughly 49% of this total supply is in circulation. 

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The crypto markets are in the midst of a serious slump. While bear markets are a natural process within the economic cycles and should not be feared, many look to these times as an opportunity to accumulate cryptocurrencies in what has become known as "buying the dip".

Bitcoin currently undervalued

According to the United States investment company, JPMorgan Chase, who valued Bitcoin at $38,000, the biggest cryptocurrency is currently undervalued. With Bitcoin essentially selling at a "discount", now is a great time to establish whether you should buy the dip. 

It is believed that the crypto markets have taken a knock following the war instigated by Russia on Ukraine, the global rising inflation rates, a looming recession and the potential energy crisis that could plague Europe. Despite the global market turmoil, cryptocurrencies have proven to be incredibly resilient over the years.

There are of course a few things to consider, mainly your appetite for risk and your currency income bracket. As the golden rule goes: never invest more than you're willing to lose. Another important component to consider when deciding whether to buy the crypto dip is where you see the cryptocurrency going in the future. Do you believe in the project's fundamentals, and that its user base will continue to grow?

Despite the cryptocurrency being 70% down from its all-time high price achieved in November 2021, industry insiders remain bullish. Chris Brendler, managing director at D.A. Davidson, believes Bitcoin will be trading at $38,000 by the end of the year, and $50,000 by the end of 2023. Jurrien Timmer, director of global macro at Fidelity Investments, on the other hand, believes that it will be worth up to $100,000 in 2024. 

Is it the right time to invest in cryptocurrencies?

Since its inception over a decade ago, Bitcoin has amassed a devoted following. However, it's impossible to say now whether Bitcoin will become the world's reserve currency or a universally acknowledged store of value, like gold. Some investors are frightened by the rush of riches or downfall, while others are enthusiastic about the potential for large gains. in the crypto market.

In 2022, Bitcoin is considerably less hazardous than it was in 2012 and is widely regarded as being a revolutionary technology. In today's geopolitical climate, Bitcoin has risen to the forefront. El Salvador's decision to legalize Bitcoin as legal money in 2021 is expected to encourage other nations to do the same, however, others may choose against it out of fear of losing their fiat currency. 

Buying Bitcoin, also known as making a Bitcoin investment, like any speculative investment, involves a degree of risk. Bitcoin was the first digital asset to give rise to the contemporary crypto economy. For many years, it had a hidden following of crypto investors who believed it may eventually replace the physical monetary system. As institutions and governments seek to satisfy their customers' growing demand for exposure, Bitcoin has grown.

In order to get the most out of a Bitcoin investment, one must know when to buy. The Bitcoin market is unpredictable and may switch rapidly, with fluctuations ranging from minutes to weeks and even months. As a result, determining the right time to buy one's digital currency is crucial.

There is no such thing as a perfect time to make a crypto investment, however, buying when in a dip or a bear market allows for lower price points. 

While Bitcoin remains the biggest cryptocurrency, there are alternative investment options to consider such as Ethereum, the second biggest cryptocurrency. Ethereum was designed as a blockchain platform on which developers could create their own blockchain-based apps, known as decentralized applications (apps). When buying the dip, investors tend to stick to the top-ranked cryptocurrencies.

Buying crypto during a bear market

In the world of cryptocurrencies, a dip is when you buy something after its value has dropped. Buying a dip indicates that you have an opportunity to invest in a digital currency or token whose price has fallen, whether it be short or long-term. A bull market is typically a good time for you to sell Bitcoin, while a bear market is a good time to buy Bitcoin.

A bear market is any decline in the market price of at least 20% over a set period of time. The December 2017 Bitcoin price crash is one such example, in which the price of Bitcoin fell from $20,000 to $3,200 in just a few days. According to folklore, the term "bear" is said to derive from a bear's fighting style, which involves using its claws in a downward motion. Others speculate that it has to do with bears going into hibernation in the winter. 

Traders prefer to acquire assets during a bear market, particularly when they are at low prices. However, determining when a bear market has come to an end makes it difficult for investors to take the risk of buying a low-value cryptocurrency that may or may not recover.

When investors learn about unfavorable circumstances involving a specific cryptocurrency or asset, the market price commonly drops. As a result of the negative spiral, more people delay investing because they believe that more terrible news is on the way and that they should prepare for the worst.

This causes the market to lose more ground as a result of panic selling and contributes to the downward trend in crypto prices. Bear markets eventually subside when investors gradually regain their confidence and buy Bitcoin, ushering in a new bull cycle.

Bear markets are a great time for Bitcoin investors to take advantage of the price swings. When Bitcoin funds are low, this typically equates to lower fees on Bitcoin transactions as well, which can help to propel Bitcoin adoption.

Is now the right time for a Bitcoin investment?

We must first assess the market's overall attitude to determine whether now is a good time to invest in Bitcoin. 

According to the crypto Fear and Greed Index, it is currently positioned on "extreme fear" indicating that it is trading well below its intrinsic values.

The "Bitcoin Monthly" report issued by Ark Invest reported that 'Hodlers,' are more powerful than ever before, with 66% of Bitcoin's supply remaining unchanged for almost a year. This illustrates the market's long-term dedication.

According to Glassnode data, short-term investments dropped -35% below the breakeven price in the third quarter. These statistics were last seen in January 2022, July 2020, and March 2020. The aggregate long- and short-term holdings are still above the breakeven price, implying that widespread capitulation has not occurred.

Trading Bitcoin in the current crypto market conditions

Finally, it all boils down to whether or not you feel comfortable putting your money into the current market conditions. There is no easy solution to when is the best time to invest in Bitcoin. We are still early in the game, and Bitcoin, as well as the entire sector, has a lot of room for development. This implies that the investment opportunities for investors will likely continue. 

Disclaimer: This article is intended for communication purposes only, you should not consider any such information, opinions or other material as financial advice. This information is specific to that of the Bitcoin market and should not be translated to the traditional stock markets. The crypto market is an entirely different asset class and crypto holdings should be treated as such.

The information herein does not constitute an offer to sell or the solicitation to purchase/invest in any crypto assets and is not to be taken as a recommendation that any particular investment or trading approach is appropriate for any specific person.

There is a possibility of risk in investing in crypto assets and investors are exposed to fluctuations in the crypto asset market. This communication should be read in conjunction with Tap's Terms and Conditions.
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_{Disclaimer: This article is intended for communication purposes only, you should not consider any such information, opinions or other material as financial advice. This communication should be read in conjunction with Tap’s Terms and Conditions.}

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Crypto lending might be the hot new product in the cryptocurrency space, but before you dive in be sure to first understand what it entails. The concept grew great traction with the rise of the decentralized finance (DeFi) movement, with platforms offering users high yields for borrowing crypto assets. 

Let’s get started with what crypto lending is, and then explore how the product works. 

What is crypto lending?

Crypto lending is a traditional banking service curated to the crypto world. With the DeFi space remains largely unregulated, many crypto exchanges and other platforms have started offering these services, with added security. 

Crypto lending involves a user lending crypto assets to a platform in return for interest, which allows other users to then borrow said crypto assets, paying interest on the amount borrowed. The platform will then take a small percentage of the interest paid. 

Depending on the platform and other factors, crypto lending platforms may be centralized or decentralized and offer exceptionally high-interest rates, with annual percentage yields (APYs) of 15% or more. With the interest rates being higher than traditional bank accounts, lenders gain access to much greater yields, increasing their returns. 

Another advantage to crypto lending is that users are still exposed to price gains in the market. Meaning that if you deposit your Bitcoin when it's worth $20,000 and the price rises in value to $50,000, you are still able to realize these returns and earn interest for the duration of the loan. 

Note that interest rates might fluctuate with market conditions on some platforms, increasing when the prices increase and decreasing when markets are down.

How does crypto lending work?

Cryptocurrency lending platforms function as middlemen connecting lenders to borrowers. Lenders deposit their digital currency into high-interest lending accounts, and borrowers utilize the lending platform to acquire loans. These systems then lend money utilizing the crypto that investors have provided them.

The platform controls its net interest margins by establishing the interest rates for both lending and borrowing.

Rates on platforms differ from cryptocurrency to cryptocurrency, some platforms might offer higher interest rates to lenders willing to commit to a certain time frame. There is no standard interest rate for cryptocurrencies, as each platform has its own set of rules.

Centralized crypto lending means putting your money in the hands of a corporation or other entity to manage and make the process easier. Accounts are created for borrowers and lenders, and loans may be requested by applicants.

Lenders and borrowers may connect their cryptocurrency wallets to a decentralized crypto lending protocol, ​​which uses smart contracts to automate the lender-borrower relationship. Smart contracts are automated digital agreements that execute once certain criteria is met. 

The advantages of crypto lending

There are several benefits to crypto lending when comparing it to a regular bank account.

Borrowers have access to these financial services without having to pass a credit check, making it more financially inclusive than traditional banking services. They are also exposed to lower interest rates than regular banking loans.

Lenders that give loans in the form of cryptocurrencies can make a lot more money from their crypto assets than savings accounts. It may also be a more adaptable choice to crypto staking, which requires users to lock up their cryptocurrency and submit it to a blockchain security method. Depending on the platform, lending usually gives users access to their funds.

The downside to crypto lending

The agreement with crypto loan companies is generally made on individual terms by institution borrowers. As interest rates vary across platforms and cryptocurrencies, each company is different.

There have been several cases where lending platforms have been hit by severe liquidity crisis, notably Celsius, Voyager Digital, and BlockFi. Glenn Huybrecht, COO of Cake DeFi, said, “Some lending providers have been very generous with low collateral requirements, which then puts them in hot water when one of their customer's defaults.”

Due to the ongoing regulation battles, these crypto services are also not backed by government safety nets, like the traditional banks are. However, some platforms do hold insurance and the necessary regulatory accreditations so be sure to seek one that has all of the above.

Closing thoughts

Crypto lending platforms differ greatly from one another so be sure to check each platform, their interest rates for all the various currencies supported, and if there are any lock-up periods or fees payable. 

We are delighted to announce the listing and support of Ankr (ANKR) on Tap!

ANKR is now available for trading on the Tap mobile app. You can now Buy, Sell, Trade or hold ANKR for any of the other asset supported on the platform without any pair boundaries. Tap is pair agnostic, meaning you can trade any asset for any other asset without having to worries if a "trading pair" is available.

We believe supporting ANKR will provide value to our users. We are looking forward to continue supporting new crypto projects with the aim of providing access to financial power and freedom for all.

Ankr is playing an integral role in the adoption of Web3, providing growth and development opportunities for network stakers, app developers, and other participants in the DeFi space.

Ankr is a decentralized Web3 infrastructure provider that facilitates the swift and effortless connection between developers, dapps, stakers, and blockchains. With Ankr's APIs & RPCs you can quickly build blockchain-based applications with confidence, stake on Ankr Earn as well as access custom solutions for any blockchain enterprise needs.

ANKR is Ankr's native cryptocurrency fueling the platform and is used as a payment method within the ecosystem.

Get to know more about Ankr (ANKR) in our dedicated article here.