What is the Difference Between a Coin and a Token?

In the cryptocurrency world, coins and tokens are both digital assets, but they differ in structure, function, and purpose.

Understanding Coins

Coins are digital assets that operate on their own independent blockchain. Examples include Bitcoin (BTC), Ethereum (ETH), and Monero (XMR), each of which operates on its own network. Coins are usually designed to be a medium of exchange, similar to traditional currency, and they can be used for transactions, store of value, and more.

Key Characteristics:

• Independent blockchain network
• Primarily function as a medium of exchange
• Fungible, divisible, portable, and limited in supply
• Coins like Ether also support transaction facilitation within their respective blockchain

Understanding Tokens

Tokens are digital assets that operate on an existing blockchain, relying on another platform’s network. Ethereum, with its ERC-20 standard, is the most common blockchain for creating tokens. Unlike coins, tokens often provide access to specific project features, like rewards or voting rights.

Examples include:

• Basic Attention Token (BAT) – used within the Brave browser ecosystem to compensate users and publishers for ad viewing
• Chainlink (LINK) – provides smart contract connectivity to real-world data

Key Characteristics:

• Operate on an existing blockchain (e.g., Ethereum)
• Offer a wider range of functionalities beyond exchange
• Associated with specific projects or platforms
• Easier to create since they don’t require building a new blockchain

Coins vs. Tokens: Key Differences

Aspect	Coins	Tokens
Blockchain	Own independent blockchain	Operates on existing blockchain
Primary Function	Medium of exchange	Access project functionalities
Examples	BTC, ETH, XMR	BAT, LINK, USDT
Creation Complexity	Requires new blockchain	Uses existing blockchain
Utility	General transaction purposes	Project-specific features

Role of Coins and Tokens in the Crypto Ecosystem

Together, coins provide a secure foundation for decentralized networks, while tokens enable the development of decentralized applications (DApps) and blockchain-based services. Both types of digital assets contribute to the diversity of the crypto space, supporting various use cases and applications across industries.