Mintable and mineable tokens are two types of digital assets that are used in the world of cryptocurrency. The major difference between both types of tokens is that producing minable tokens requires more time, effort, and resources compared to minted tokens.
Difference Between Mintable Tokens and Minable Tokens
Mintable tokens are digital assets that can be created on a smart contract platform, such as Ethereum, without the need for any consensus-related activities. These tokens are created through the use of a minting function within the smart contract, which generates a new supply of tokens. Mintable tokens can then be distributed and traded in the market.
Token minting is the process of creating new tokens on a smart contract platform, such as Ethereum. These tokens, like ERC-20 and ERC-721, do not require the same resources or validation process as traditional mineable tokens like Bitcoin and Ethereum.
Mintable tokens can have caps on their total supply, and the supply can be adjusted through the minting or burning of new tokens. It is a technique that is often used with algorithmic and crypto-backed stablecoins to manage their supply and value.
Mineable tokens are digital assets that are generated through the mining process on a proof-of-work or proof-of-stake blockchain. On proof -of work-models, Miners have to solve challenging equations while Validators verify the validity of blocks by staking their own tokens.
Miners or validators play a crucial role in securing the network and producing blocks, and as a reward for their efforts, they are issued new tokens that have been minted by the protocol.
The issuance of mineable tokens follows certain consensus rules, and the supply of these tokens can be capped (hard cap or soft cap) or subject to a decrease over time through processes like halving. For instance, the Bitcoin network has a fixed supply of tokens and a block reward of 6.25 BTC per block, while the Litecoin has a block reward of roughly 12.5 LTC per block.
What is a Minting Function
A minting function is a feature in some cryptocurrencies that allows users to create new tokens and add them to the blockchain. The process of creating new tokens is often referred to as "minting."
Continuous Token Supply
In most cases, minting requires the user to have a certain amount of tokens already in their possession, as well as meet certain other conditions specified in smart contracts. For example, they may need to prove that they have completed a specific task or contributed to the network in some way.
The minting function is typically implemented as a smart contract, which is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The smart contract can automatically enforce the conditions of the minting process, ensuring that new tokens are only created in accordance with the specified rules.
Some examples of cryptocurrencies that have a minting function include Ethereum and Binance Coin. Minting can be used for a variety of purposes, such as incentivizing users to contribute to the network, or as a way to fund the development of a project.
Mintable Tokens Supply Types:
Fixed Token Supply
A mintable token with a fixed supply is one in which the total number of tokens that will ever be produced is set and cannot be increased. This means that once all the tokens have been mined or created, no more will be added to the supply. This type of token is often used as a way to increase the value of the tokens over time, as the fixed supply model can lead to demand exceeding the limited supply available.
The fixed supply model can also be seen as a way to combat inflation, as there is no possibility of new tokens being created and diluting the value of existing ones. Examples of cryptocurrencies with a fixed supply include Bitcoin and Litecoin. In the case of Bitcoin, the total supply is capped at 21 million proof of work tokens, while Litecoin has a maximum supply of 84 million tokens.
Continuous Token Supply
This is a type of mintable token where new tokens can be created and added to the supply on an ongoing basis. This means the total number of tokens in circulation is not fixed and has a continuous supply. A Continuous supply model is often used to fund project development or incentivize network contribution.
However, they can also be prone to inflation, as the creation of new tokens can dilute the value of existing ones. Examples of cryptocurrencies with a continuous supply model include Ethereum and Binance Coin.
In the case of Ethereum, new tokens are created through the minting function, which is implemented as a smart contract. In the case of Binance Coin, new tokens are created through a process called "coin burning," in which a portion of the supply is permanently removed from circulation.
Examples of Mintable Tokens
Stablecoins are a type of mintable token that is designed to maintain a stable value relative to a specific asset or currency. They are often pegged to the value of a stable asset, such as the US dollar, and are designed to maintain a 1:1 value ratio with the underlying asset. Stablecoins are often used as a way to provide a stable store of value within the volatile cryptocurrency market. They can also be used for cross-border payments, as they allow users to transfer value without being subject to the fluctuations of traditional cryptocurrencies. Examples of stablecoins include Tether, USDC, and Paxos Standard. These stablecoins are backed by real-world assets, such as cash like the US dollar, or gold, and are intended to provide a more stable alternative to traditional cryptocurrencies.
NFTs (Non-Fungible Tokens) are a type of mintable token that represents a unique digital asset. They are often used to represent things like art, music, videos, or other types of media. NFTs are stored on a blockchain and are unique because they cannot be replaced or exchanged for another asset of equal value.
One of the key features of NFTs is that they can be bought, sold, and traded just like any other asset. They have gained popularity in recent years as a way for artists and creators to monetize their digital content and for collectors to own and trade unique digital assets. NFTs are minted using smart contracts, which define the terms and conditions of the asset and ensure that it is properly registered and tracked on the blockchain. Some popular examples of NFTs include Cryptokitties and BAYCs.
The Bottom Line
In summary, minable tokens are those that are generated through a process called "mining," which involves using computer power to solve complex mathematical problems and add transactions to a blockchain's public ledger. On the other hand, mintable tokens are created and issued by a central authority through smart contracts, such as a company or organization, and do not require mining to enter circulation. There lies the difference between mintable and mineable tokens. Both minable and mintable tokens have their own unique characteristics and uses, and the decision to use one over the other will depend on the underlying business model, specific needs and goals of a project.