It’s very important that you understand the difference between a crypto-coin (altcoin) and a crypto-token (ERC-20 token) before putting your money in the digital market.
A coin is a cryptocurrency that has its own blockchain. A blockchain is a ledger that records and stores digital information on a public database. A digital currency that is built with its own customized database or blockchain is an actual coin. Currencies that are developed on an existing blockchain are not coins.
Bitcoin is the first and the most popular digital currency that was built on the blockchain. Other currencies were created or built to make improvements to the original blockchain of Bitcoin. These are called altcoins, as they are developed as an alternative to Bitcoin. The purpose of a coin is purely financial. Coins are created to enable users to perform secure and fast money transfers from one point to another.
ERC-20 Tokens, on the other hand, are developed on an existing blockchain. A Token represents an asset or a utility, and in no circumstances can it be treated as money. It still has a market value, but it is different from a coin. Most tokens are developed on the Ethereum Blockchain with the use of smart contracts.
A Token is a form of security or backup to a decentralized application (DApp) that makes use of blockchain technology. The purpose of a token is completely for and within that particular application for which it has been created. For example, if there should be a KacieBusiness Token, the token can only be used on the platform to transact business but nowhere else. Tokens can still be transacted on the exchange, but their uses are limited.
In summary, coins are only used as money and for making payments and money transfers. Tokens are backed by applications designed to perform specific tasks.
The advantage of holding a token is the fact that it has a specific purpose and will never go out of demand as long as the application has real-world uses.