Crypto Coin vs Token: Understanding the Difference

The validators of PoW networks use enormous amounts of computing power to verify transactions. The PoS mechanism requires staking coin holdings to verify transactions. This article will explain what unique characteristics set coins and tokens apart from each other. This is because they’re not as volatile and aren’t subject to the same pump-and-dump cycles as tokens.

  • If a cryptocurrency is on a native blockchain, it’s a coin.
  • Litecoin , Bitcoin Cash , Namecoin, and Dogecoin are typical examples of altcoins.
  • A crypto token can represent a share of ownership in a DAO, a digital product or NFT, or even a physical object.
  • Consequently, native coins are always the cryptocurrency of the blockchain they run on.
  • It is not intended to offer access to any of such products and services.
  • One of the largest crypto exchanges considers all tokens to be altcoins, yet refers to all crypto assets as tokens.

For instance, coins are used to purchase other digital assets such as NFTs or traditional assets. Tokens behave very similarly to cryptocurrencies, in the sense that they are a type of currency that exists on a blockchain, and can be transferred from one account to another. However, unlike cryptocurrencies, their behaviour is not built into the blockchain software itself. Instead, their behaviour comes about by implementations in smart contracts.

Crypto Token vs Coin: The Key Differences Explained

The easiest route is to use special ready-made solutions for token generation. Using such platforms does not require you to have any coding skills. It could be as simple as creating your own website with a website builder. Forbes Advisor adheres to strict editorial integrity standards.

Coin vs. Token

Generally, crypto coins are either mined using a proof of work consensus mechanism or earned via a proof of stake mechanism. A blockchain keeps track of all transactions that involve its native crypto coin. The tricky part with the alternative distinction is distinguishing between coins and tokens in terms of functionality. This is because the methods of using coins and tokens often overlap, which is partly due to the extensive versatility of tokens. An independent blockchain allows for creating new functions and offers unique technical solutions. The efficiency and security of the underlying blockchain technology are among the factors that determine the coin’s intrinsic value.

Token vs. Cryptocurrency: Primary Uses and Differences

Digital money has arrived, but the new vocabulary can be difficult to parse. A good start to mastery of this world is to understand the difference between crypto coins and tokens. A crypto token is a cryptocurrency that’s created or programmed on an existing blockchain. Cryptocurrency tokens that are compatible or usable on Ethereum are known as ERC-20 tokens.

Coin vs. Token

Ethereum, on the other hand, is a token because it runs on the Ethereum blockchain. You can argue that meme coins don’t do much, but they undeniably cryptocurrencies VS tokens have a form of value. At the time of writing, Coinbase says Shiba Inu’s value has climbed 91,838,886.86 per cent in the last year.

Types of Crypto Tokens

Users can send and receive assets and pay for the computing power required to carry out specific tasks using the blockchain’s native token, ETH. To keep coins and tokens apart, you can think of coins as being the money needed to purchase digital assets. Tokens, on the other hand, represent specific assets and are used to claim ownership or grant rights to the holder. The difference in functionality can be explained through their opposing technical basis.

Coin vs. Token

These include fungible and non-fungible tokens on competing blockchains like Solana, Cardano, and the BNB Smart Chain. All the bitcoins that miners create are recorded on Bitcoin’s blockchain. The fact that BTC is on its native blockchain is the reason it’s a coin rather than a token. The best known example of a coin in the blockchain space is Bitcoin, the original crypto coin/cryptocurrency.

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A crypto coin is issued directly by the blockchain protocol, which is why it’s called the blockchain’s native cryptocurrency. The core, major difference between crypto coins and tokens is the fact that coins have a blockchain of their own, while tokens reside on already-existing blockchains. For example, Bitcoin is a coin, since it does have a dedicated blockchain. On the flip side, Shiba Inu is a token, since it’s based on the Ethereum blockchain. However, fees for these transactions are paid in the blockchain’s native coin and not these digital assets.

Coin vs. Token

However, multiple tokens can exist in the same wallet, so long as they’re on the same blockchain. For example, an Ethereum wallet can hold ETH, MATIC, and 1INCH, because all these assets exist on the Ethereum blockchain. For example, assets can be created on the blockchain to represent a whole company’s equity. Companies can issue tokens just like they issue shares and bonds . The tokens work just the same way as they are prone to price variations influenced by the company’s technological and marketing progress.

What is cryptocurrency?

When a token is spent, it moves from one place to another. For example, NFTs (no-fungible tokens) are one-of-a-kind items, so the change in ownership must be manually handled. A coin doesn’t have to be moved from one place to another.


The primary feature that separates crypto tokens from coins is that the former exists on top of a blockchain. Crypto tokens aren’t native to the blockchain they’re built on. Instead, developers take advantage of a pre-existing blockchain to launch their tokens. The reason many people confuse crypto coins with cryptocurrencies is because of the word “currency.” Crypto coins are often used as mediums of exchange. However, this common use case isn’t what sets digital coins apart from tokens.

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