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  2. Akadeemia
  3. 1.04 Cryptocurrency coins vs tokens: what is the difference?
  • 1.01 This is why you can no longer ignore cryptocurrencies
  • 1.02 What are cryptocurrencies?
  • 1.03 Cryptocurrencies vs fiat money: similarities and differences
  • 1.04 Cryptocurrency coins vs tokens: what is the difference?
  • 1.05 Storing crypto: where and how?
  • 1.06 Understanding crypto wallet terms
  • 1.07 Best practices to keep your crypto safe
  • 1.08 What is bitcoin?
  • 1.09 How bitcoin price is defined
  • 1.10 Sending and receiving bitcoin
  • 1.11 What is bitcoin halving?
  • 1.12 Understanding bitcoin nodes
  • 1.13 Can bitcoin network be hacked?
  • 1.14 The fundamentals of altcoins
  • 1.15 The basics of blockchain technology
  • 1.16 Blockchain use cases
  • 1.17 What is mining in blockchain?
  • 1.18 How do mining pools work?
  • 1.19 Bitcoin mining difficulty & pre-mined coins
  • 1.20 What is Ethereum and how does it work?
  • 1.21 What are Proof-of-Work Cryptocurrencies?
  • 1.22 What Are Proof-of-Stake Cryptocurrencies?
  • 1.23 Stablecoins: What Are They and How Do They Work?
  • 1.24 The Leading Cryptocurrencies for Digital Payments
  • 1.25 DeFi Cryptocurrencies
Previous lesson

1.04 Cryptocurrency coins vs tokens: what is the difference?

This lesson explains the differences between crypto coins and tokens. 

article
zondacrypto Team
13 jaanuar 2022
20 oktoober 2023

​

In your research to understand the crypto sphere, you may have encountered articles where the terms ‘coins’ and ‘tokens’ are being used interchangeably. It is common to think that coins and tokens are the same. However, these terms are not the same and they have a fundamental difference.

If you are a newbie to crypto, you might not know the difference between coins and tokens. But, it is important to understand the terms properly before learning further concepts about cryptocurrencies. We are here with another lesson to help you understand coins, tokens, and everything in between. 

This lesson explains the differences between crypto coins and tokens. 

Contents

  • What is a cryptocurrency coin?
  • What is a cryptocurrency token?
  • Differences between coins and tokens

What is a cryptocurrency coin?

A cryptocurrency coin is built on an independent blockchain network. It is an asset native to its very own blockchain. It can be used as a store of value, or a medium of exchange. 

The largest cryptocurrency in the world, Bitcoin is the best example of a cryptocurrency coin. It exists on its own independent ledger i.e. Bitcoin blockchain as a unit of value. Other leading coins like Ether and Cardano also exist on their own blockchain platforms.

Examples of cryptocurrency coins - Bitcoin (BTC), Ether (ETH), Litecoin (LTC), Cardano (ADA), Ripple (XRP), Bitcoin Cash (BCH), etc. 

What is a cryptocurrency token?

A crypto token is a digital asset built on an existing blockchain platform. It isn’t native to any blockchain network. 

Crypto-related organizations or projects develop crypto tokens on top of existing blockchains. Most of the crypto tokens are issued or minted on the Ethereum blockchain network. They are called ERC-20 tokens. 

Unlike coins, it is very simple to create tokens. By writing a bunch of computer codes or using automated tools, you can create a token. You can even give it a name based on your preference. 

Examples of crypto tokens - ERC20 tokens like Tether (USDT), Chainlink (LINK), USD Coin (USDC), Wrapped Bitcoin (WBTC), etc. 

​

 

Differences between crypto coins and crypto tokens

We’ve looked at the basic fundamental difference between crypto coins and tokens. Let’s understand their differences in detail. 

  • Cryptocurrency coins are based on their own blockchain network. But, tokens are built on existing blockchains.
  • A crypto coin can be used for payments and as a store of value but tokens have multiple use cases like security tokens, asset-backed tokens, non-fungible tokens (NFTs), tokenized money (Stablecoins), etc.
  • It is less expensive to create a token when compared to a coin.
  • Tokens can be created easily on an existing blockchain by using automated tools and templates while creating a coin requires a lot of work as it involves creating a completely new blockchain network.

One interesting thing about tokens is, they can become coins if the project develops its own blockchain. When tokens are migrated to the new blockchain network, they become coins. Binance Coin (BNB) and Tron (TRX) are examples of this case. Previously they existed as tokens on the Ethereum blockchain, however, they now have their own blockchain i.e. Binance Smart Chain and Tron. 

The easiest way to differentiate the coins and tokens is to look if they have their own blockchain network or not. We hope that this lesson keeps you in a better position to use the terms ‘coins’ and ‘tokens’ correctly the next time.

DISCLAIMER

This material does not constitute investment advice, nor is it an offer or solicitation to purchase any cryptocurrency assets.

This material is for general informational and educational purposes only and, to that extent, makes no warranty as to, nor should it be construed as such, regarding the reliability, accuracy, completeness or correctness of the materials or opinions contained herein.

Certain statements in this educational material may relate to future expectations that are based on our current views and assumptions and involve uncertainties that could cause actual results, performance or events to differ from those statements.

BB Trade Estonia OU and its representatives and those working directly or indirectly with BB Trade Estonia OU do not accept any liability arising from this article.

Please note that investing in cryptocurrency assets carries risks in addition to the opportunities described above.

Next lesson

1.05 Storing crypto: where and how?

1.05 Storing crypto: where and how?
Previous lesson
21 / 9 / 23
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1.23 Stablecoins: What Are They and How Do They Work?

A stablecoin is a non-volatile cryptocurrency whose price is tied to the value of a specific fiat currency.

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1.23 Stablecoins: What Are They and How Do They Work?
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2.04 Understanding market capitalization

This lesson centers on understanding cryptocurrency market capitalization.

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2.04 Understanding market capitalization
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2.03 Common crypto trading terms

This lesson is a compilation of the most commonly used crypto trading terms.

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2.03 Common crypto trading terms
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2.01 Why to invest in cryptocurrencies

This lesson explains why cryptocurrencies might be a good asset to include in your investment portfolio.

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2.07 Measuring market depth and liquidity

This lesson explains market depth, market liquidity, and volatility.

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2.08 Three major types of trade orders you need to know

This lesson explains three major types of trade orders and how they work. 

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2.09 Fundamental and technical analysis for crypto trading

This lesson focuses on explaining how fundamental and technical analysis will help you assess cryptocurrencies.

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2.10 Bull markets vs Bear markets

This lesson explains bull and bear markets and what you can do in each case.

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2.10 Bull markets vs Bear markets
14 / 1 / 22
Bitcoin
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1.08 What is bitcoin?

In this lesson, we dig deep into the roots of the crypto and blockchain tree - Bitcoin.

Read more
1.08 What is bitcoin?
14 / 1 / 22
Bitcoin
Economics

1.09 How bitcoin price is defined

This lesson helps you understand what determines the price of bitcoin.

Read more
1.09 How bitcoin price is defined
14 / 1 / 22
Bitcoin
Essentials

1.10 Sending and receiving bitcoin

In this lesson, we explain how to send and receive bitcoins.

Read more
1.10 Sending and receiving bitcoin
13 / 1 / 22
Bitcoin
Blockchain

1.11 What is bitcoin halving?

This lesson takes you through the concept of bitcoin halving.

Read more
1.11 What is bitcoin halving?
13 / 1 / 22
Bitcoin
Blockchain

1.12 Understanding bitcoin nodes

This lesson explains what a bitcoin node is and the different types of nodes.

Read more
1.12 Understanding bitcoin nodes
13 / 1 / 22
Bitcoin
Safety
Blockchain

1.13 Can bitcoin network be hacked?

In this lesson, we discuss why it is nearly impossible to hack the bitcoin blockchain.

Read more
1.13 Can bitcoin network be hacked?
13 / 1 / 22
Altcoin
Essentials

1.14 The fundamentals of altcoins

In this lesson, you learn about the fundamentals of altcoins.

Read more
1.14 The fundamentals of altcoins
13 / 1 / 22
Altcoin
Essentials
Ethereum

1.20 What is Ethereum and how does it work?

This lesson helps you decode Ethereum thoroughly.

Read more
1.20 What is Ethereum and how does it work?
13 / 1 / 22
Bitcoin
Essentials
Wallet

1.24 The Leading Cryptocurrencies for Digital Payments

Digital cash cryptocurrencies are cryptos that are mainly used as digital money for making financial ...

Read more
1.24 The Leading Cryptocurrencies for Digital Payments
13 / 1 / 22
Trading
Blockchain
DeFi

1.25 DeFi Cryptocurrencies

Decentralized finance (DeFi) is one of the most important segments of the cryptocurrency market because it gives ...

Read more
1.25 DeFi Cryptocurrencies
13 / 1 / 22
Bitcoin
Blockchain

1.19 Bitcoin mining difficulty & pre-mined coins

This lesson covers two concepts - Bitcoin mining difficulty and pre-mined coins.

Read more
1.19 Bitcoin mining difficulty & pre-mined coins
13 / 1 / 22
Bitcoin
Blockchain

1.18 How do mining pools work?

This lesson explains the function of mining pools in detail.

Read more
1.18 How do mining pools work?

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