Coins and Tokens are two different types of Cryptocurrencies.
And as we all know, cryptocurrencies are digital or virtual currencies that use cryptography to secure transactions. Cryptocurrencies are often (but not always) decentralized systems that allow for the creation, transfer, and verification of transactions without the need for a central authority, such as a bank or government.
The differences aren’t likely to matter to the average person in most cases — but you may as well know the proper definitions.
A coin is a cryptocurrency that is native to its own blockchain. Examples of coins include Bitcoin and Litecoin. Coins are typically used as a means of exchange or store of value, and they are often the primary purpose of the blockchain on which they are created.
A token is a cryptocurrency that is built on top of an existing blockchain. Tokens can represent a variety of assets, such as digital currencies, loyalty points, and even physical assets like gold or real estate. The blockchain on which a token is created is often referred to as the “platform” or “protocol” blockchain, and the token is said to be built on top of this platform. Examples of platform blockchains include Ethereum and Binance Smart Chain.
Why Does It Even Matter?
The only reason it’s important to understand the difference between coins and tokens is because they each have different characteristics and uses.
For example, coins are usually more established and have a longer history than tokens, which are often newer and less tested. Additionally, the value of coins is often more stable than tokens, which can be more volatile.
Understanding the differences between coins and tokens can help you make informed decisions about which cryptocurrencies to invest in or use for transactions.