3

According to the docs, ADA is an asset and a token, but they also indicate that tokens are on-chain versions of some off-chain asset. They also compare ADA and tokens in ways to imply that they are not the same kind of thing.

So, what is it? what is it called?

3

The terms cryptocurrency, token and asset are not mutually exclusive.

However, there are specific definitions that show a subtle difference between these three terms:

Cryptocurrency

Cryptocurrency is a digital asset that circulates on the internet as a medium of exchange. It employs blockchain technology — a distributed ledger of transactions that is publicly available — and is secured by advanced cryptography. This revolutionary asset architecture allows for certainty that cryptocurrency coins and tokens cannot be double-spent even in the absence of a centralized intermediary. The first cryptocurrency to achieve mainstream success was Bitcoin which paved the way for the proliferation of many other cryptocurrencies.

Token

Within the context of blockchain technology, a token generally refers to a unit of value for a programmable asset that is managed by a smart contract and an underlying distributed ledger. Tokens are the primary means of transferring and storing value on a blockchain network [...]. Tokens can also be designed to be either fungible or non-fungible, depending on a network's specific needs. And while many tokens are primarily used for simple transactions, an increasing number of blockchain projects are designing tokens encoded with a variety of wide-ranging use cases, primarily in regards to on-chain governance and network maintenance.

Asset

An asset is anything of monetary value that can be owned or purchased. Within the context of investing, assets can refer to a variety of financial and physical instruments, from stocks to real estate to gold to dollars. A bitcoin is a particular form of crypto or digital asset.

2
  • these are definitions used in blockchain generally. Im asking specifically for cardano. the docs dont appear to be using the same definitions. Oct 9 at 16:11
  • Hi @wolverineks! Cardano does not exist in isolation from reality. Everything that is inherent in other blockchains and networks, to a certain extent, is inherent in Cardano.
    – Andy Jazz
    Oct 9 at 19:24
0

Ada is a digital token on the Cardano blockchain. Its currency symbol is the empty string - "".

It is similar to any other token that can be minted on the Cardano blockchain. However, there is a key difference.

A token are represented by a currency symbol which is the hash of the minting policy that is used to create it.

A minting policy describes how a token can be minted and burned, and no policy can mint or burn Ada, hence the empty string, which no policy can hash to.

4
  • "Ada is a digital token" so, you're saying that ada is not an asset? Oct 6 at 2:12
  • I think the terms are not mutually exclusive @wolverineks. Ada is a digital token, the native currency of Cardano, and it is an asset specified by those two properties I just named. Tokens can also represent off chain assets; this valuable property is part of what makes those tokens assets-- that is, a valuable thing to own (rough def. of 'asset'). I could be wrong if I'm unfamiliar with some specific technical meanings of the terms, but that is how it appears to me, prima facie. Oct 6 at 5:16
  • * are all tokens digital? iow, are there non-digital tokens on cardano? * are all tokens currencies on cardano? * are there non-native currencies? * tokens can represent an asset, but do they have to? Oct 9 at 16:12
  • I would probably go down the route of calling ADA a financial instrument. From a technical perspective, IT IS a token with no currency symbol. Thus, IT IS a native token, it just can't be minted or burnt (unless you take the PoB paper published by IOG and implement it - I have spent some time reading that paper and it seemed to me as though you could only accomplish PoB with P2PKH addresses - maybe if you flipped some bits in Byron addresses? - but you could just create an address and destroy/rm the private key and throw away the key derivation phrase, if you REALLY wanted to burn some ADA).
    – Dilworth
    Oct 16 at 0:33

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.