With crypto, you either have a coin or a token. People often use these terms interchangeably, but they’re not the same thing. Knowing the difference between these two will help you better understand how cryptocurrencies are created, used, and traded.

Similarities

  • Both are digital assets that can store and transfer value.

  • Both can be traded on exchanges and used for payments or in decentralized applications (dApps).

  • Both rely on blockchain technology for security and transparency.

Key Differences

  • Where they exist:

    • Coin – Has its own native blockchain (e.g., Bitcoin runs on the Bitcoin network).

    • Token – Built on an existing blockchain (e.g., ERC-20 tokens on Ethereum or BEP20 tokens on Binance).

  • Function:

    • Coin – Primarily used as money, a store of value, or to pay network fees.

    • Token – Can represent anything from governance rights to NFTs and DeFi assets; e.g., Jupiter and Raydium are both tokens on Solana .

  • Creation:

    • Coin – Requires building and maintaining a standalone blockchain.

    • Token – Created through smart contracts on an existing blockchain.

Examples:

  • Coins: $BTC (Bitcoin), $ETH (Ethereum), $ADA (Cardano), $SOL (Solana)

  • Tokens: $USDT (Tether), $UNI (Uniswap), $LINK (Chainlink), $APE (ApeCoin)

Real-life Analogy

  • A coin is like the national currency of a country, as it’s tied to that country’s economy (blockchain).

  • A token is like a gift card or voucher, as it works inside a specific ecosystem but isn’t its own currency.

Why It Matters

  • Coins form the backbone of their blockchains, enabling users to pay fees and secure the network.

  • Tokens power DeFi, NFTs, governance, and more, making them flexible for new Web3 use cases.

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