If you’re new to the world of cryptocurrency, the terms coin and token might sound interchangeable—but they’re not. While both are forms of digital assets used in blockchain ecosystems, they serve different purposes and operate on different levels of blockchain infrastructure. Let’s break it down in a clear and simple way.
🪙 What is a Coin?
A coin is a cryptocurrency that runs on its own blockchain. It is primarily used as a currency, similar to traditional money, and can be used for peer-to-peer transactions, store of value, or to pay for goods and services.
Examples of coins:
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Bitcoin (BTC) – runs on the Bitcoin blockchain.
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Ethereum (ETH) – runs on the Ethereum blockchain.
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Litecoin (LTC) – runs on the Litecoin blockchain.
Think of a coin like a national currency. Just like the US dollar runs on the U.S. economy and financial system, Bitcoin runs on the Bitcoin blockchain.
🎟️ What is a Token?
A token is a digital asset that is built on top of an existing blockchain, such as Ethereum, Binance Smart Chain, or Solana. Tokens rely on the infrastructure of these blockchains and are created using smart contracts.
Types of tokens:
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Utility Tokens – Give access to a product or service (e.g., Chainlink (LINK), Filecoin (FIL)).
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Security Tokens – Represent investment contracts or real-world assets.
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Governance Tokens – Allow users to vote on protocol decisions (e.g., Uniswap (UNI)).
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NFTs (Non-Fungible Tokens) – Unique digital assets, often for art, gaming, or identity.
So while coins are the blockchain's native currency, tokens are more like apps built within an operating system—they need the blockchain (like Ethereum) to function.
🔑 Key differences between Coins and Tokens
| Feature | Coins | Tokens |
|---|---|---|
| Blockchain | Runs on its own | Runs on an existing blockchain |
| Used for | Currency, payments, store of value | Access to services, utility, voting, etc. |
| Creation | Native to the blockchain | Created using smart contracts |
| Examples | BTC, ETH, ADA | USDT, UNI, MANA, SHIB |
🤔 Why This Matters
Understanding the difference between coins and tokens helps investors, developers, and users navigate the crypto ecosystem more effectively. Whether you're trading, investing, or building on the blockchain, knowing this distinction helps you assess value, risk, and utility more accurately.
🧠 Final Thoughts
In short: coins are like the "main currency" of a blockchain, while tokens are like digital assets or apps that live within it. Both are vital to the world of Web3 and DeFi, and knowing how they work is the first step toward becoming a savvy crypto user.
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