What is a crypto token: digital assets of the new generation
A token is a digital asset that exists on an already active blockchain. Unlike coins, which operate on their own blockchain platforms, like Bitcoin, tokens are created through a smart contract on a blockchain like Ethereum or Binance Smart Chain.
There are four types of tokens:
Utility tokens are keys to project ecosystems. Tokens like UNI or AAVE allow users to vote, access services, or discounts in decentralized applications (DApps). Without them, platforms do not function.
Payment tokens are used for exchanging value. A simple example is USDT or Dai, which maintain a stable value to minimize volatility risks. They are digital alternatives to traditional currencies.
Non-fungible tokens (NFTs) are unique assets. They cannot be divided, copied, and confirm ownership of digital art, music, collectibles, or even virtual lands.
Security tokens are tokenized securities regulated by financial authorities. Their value is linked to real assets: shares of companies, real estate, or income. Their advantages include transparency, accessible investments, and automated management through smart contracts.
How do tokens work?
Tokens operate through smart contracts — automated agreements on the blockchain that execute under specific conditions. For example, creating a token on Ethereum (ERC-20 format) or Binance Smart Chain (BEP-20) happens through code that defines its quantity, functions, and circulation rules. This technology eliminates intermediaries, ensures speed and security.
Tokens are used in:
Finance: providing liquidity in DeFi, staking, lending
In art and culture: selling digital paintings, music through NFTs
In metaverses: tokens for purchasing virtual real estate or avatars
Investments: tokenization of real assets for small investors
Tokens are transforming financial systems, art, and investments. Smart contracts and tokenization simplify many processes, making them transparent, secure, and accessible. In the future, tokens will be the key to a global decentralized economy.
What is a cryptocurrency coin: the native asset of a blockchain
A coin is a standalone unit in the crypto world. It exists on its own blockchain and is a fundamental part of it. If the blockchain is a network, then the coin is its bloodstream. Bitcoin (BTC), Ethereum (ETH), BNB are coins that ensure the functioning of blockchains and their ecosystems.
Coins serve three main roles:
Payments — the transfer of value between network participants (Bitcoin as digital gold)
Transaction fees — payment for computational resources (Ethereum)
Network security — participation in block creation and security through mining (Proof-of-Work, PoW) or staking (Proof-of-Stake, PoS)
Generation of cryptocurrencies
Different coins go through a certain evolution, changing generations:
First generation: Bitcoin (BTC) — a decentralized currency for storing and transferring value. Its strength lies in simplicity and reliability.
Second generation: Ethereum (ETH) — a blockchain that introduced smart contracts and opened the possibility of creating decentralized applications (DApps).
Ecosystem coins: BNB on the Binance Smart Chain blockchain. It is not just a means of payment, but a key to the ecosystem: from reducing fees to participating in decentralized governance.
A cryptocurrency coin is the foundation of a blockchain ecosystem: from payments to security, it defines the viability and resilience of the network.
Bitcoin was the first step toward decentralization, Ethereum expanded capabilities through smart contracts, and ecosystem coins like BNB turned blockchains into platforms for innovation.
Key differences between cryptocurrency coins and tokens
The crypto market is rapidly evolving, but terminology often remains a major barrier for newcomers and even experienced market leaders. Below is a table with key differences between coins and tokens:
Bitcoin: coin or token?
Bitcoin is the crypto beginning. It built its own blockchain, became a symbol of decentralization and financial independence. No dependencies, no platforms — just a pure network and cryptographic code.
Why is Bitcoin a coin?
Own blockchain: an autonomous transaction system without intermediaries
Functionality: Bitcoin retains its value, allows for global payments, and serves as a hedge against inflation
Benchmark of decentralization: there is no owner or centralized control — only a network of participants
Bitcoin is not a token, but a fundamental coin that set the rules of the game in the crypto sphere. It remains the benchmark for the entire market.
How to use tokens and coins on Binance
You know the difference between coins and tokens. Now it's time to act: Binance provides all the opportunities to make them work for you.
Here is what you can do on Binance:
Purchase assets: BTC, ETH, BNB, or promising tokens through spot trading
Staking and farming: locking up assets to earn stable income in DeFi
Lower fees: pay transaction fees with BNB to minimize costs
Investments in Launchpad: early access to new tokens with high potential
Binance is a platform for practical solutions. From purchasing assets to creating income — here are all the tools to make coins and tokens work for your goals.
How to earn on tokens and coins
To succeed in the crypto market, you need to build strategies.
Basic tips for earning:
Long-term investments: BTC and ETH are assets with proven time and growth.
DeFi platforms: staking tokens like AAVE or UNI for passive income.
Launchpad/Launchpool: participation in early projects to receive new assets.
Risk management: diversify your portfolio, analyze projects, and use a balance between stability and profitability.
Coins and tokens have different functions but the same potential — profit for those who act wisely. According to 2024 statistics, there are currently 562 million cryptocurrency owners in the world (6.8% of the global population), and market capitalization has increased by 36% and continues to grow. Now is the time to figure it out and start your own financial journey in the global digital economy.
FAQ
What is blockchain and why is it needed?
Blockchain is the foundation of cryptocurrencies: a transparent, decentralized database that stores the history of transactions in blocks. It ensures security, eliminates intermediaries, and allows for the creation of coins and tokens that form financial innovations: from Bitcoin as digital gold to NFTs and asset tokenization.
What is the difference between coins and tokens?
Coins exist on their own blockchains (Bitcoin, Ethereum). They are used for payments and support network security through mining or staking.
Tokens are assets on existing blockchains (Ethereum, Binance Smart Chain) that add functionality through smart contracts: access to DeFi, NFT, GameFi, and tokenization of real assets.
How to start investing in cryptocurrency from scratch?
Create a cold or hot wallet (Trust Wallet, Ledger)
Choose strategic assets: BTC, ETH, or promising tokens
Formulate a strategy, for example, long-term HODL, staking for passive income, or trading for active investors
