The world of cryptocurrency is filled with new terminology, and one of the most common questions for newcomers is: Whatās the difference between a coin and a token? While these terms are sometimes used interchangeably, they have distinct meanings in the blockchain ecosystem. Letās break down the differences, using real examples.
What is a Coin?
A coin is a digital asset that operates on its own native blockchain. Coins are typically used as a medium of exchange, a store of value, or in some cases, to power the blockchain itself (like paying for transaction fees).
Key Features of Coins:
Native to their own blockchainUsed for payments, value transfer, and sometimes governance or transaction fees
Examples:
Bitcoin (
$BTC ): The original cryptocurrency, running on the Bitcoin blockchain.Ethereum (
$ETH ): The native coin of the Ethereum blockchain, used for gas fees and transactions.Ripple (
$XRP ): The native asset of the XRP Ledger, designed for fast, low-cost cross-border payments.SEI (SEI): The native coin of the Sei blockchain, a trending Layer 1 optimized for trading.
What is a Token?
A token is a digital asset that is built on top of an existing blockchain. Tokens rely on the infrastructure of another blockchain, most commonly Ethereum, BNB Chain, or Solana. Tokens can represent a wide range of assets and utilities, including governance rights, stablecoins, NFTs, or even access to specific applications.
Key Features of Tokens:
Built on existing blockchains (not native)Can represent utility, governance, or other assetsCreated using smart contracts (e.g., ERC-20, BEP-20 standards)
Examples:
Uniswap (UNI): An ERC-20 token on Ethereum, used for governance of the Uniswap DEX.
Tether (USDT): A stablecoin token issued on multiple blockchains, including Ethereum and Tron.
How to Tell the Difference
A quick way to check:
If the asset has its own blockchain, itās a coin (BTC, ETH , XRP, SEI).If it operates on another blockchain, itās a token (UNI, USDT, CAKE, APE, PYTH, WIF).
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