@ChrissCrypto 20 June 2021

Difference between Coins & Tokens

Hello everyone!  Many of you often wonder **why we differentiate between Coins and Tokens**, ***some of you even confuse the two denominations***, calling 'Tokens' those which are 'Coins' and calling 'Coins' those which are actually 'Tokens'. But **both are Cryptocurrencies/Crypto Assets**.   Let's first recall **what a Cryptocurrency is**: ***Electronic/Virtual Currency built with Strong Cryptography***. ***It is highly Secure and Immutable***. ***And are based on Blockchain Technology***. ***One of the first Electronic Currencies that inspired our current Cryptocurrencies***, was ***created by*** **David Chaum in 1989**, under the name **DigiCash**  https://bitcoinmeister.eu/the-origin-of-cryptocurrencies-part-12/   **To understand this big difference between Coins & Tokens, just remember this:** **A COIN is a Cryptocurrency that operates and functions on a Blockchain of its own** and thus ***each Blockchain is different***! Like for example:  **Bitcoin (BTC)** ***operates and functions on the Bitcoin Blockchain*** https://bitcoinmeister.eu/bitcoin/ **Ether (ETH)** ***operates and functions on the Ethereum Blockchain*** https://bitcoinmeister.eu/ethereum/ **Dogecoin (DOGE)** ***operates and functions on the Dogecoin Blockchain*** https://bitcoinmeister.eu/dogecoin/ **Polkadot (DOT)** ***operates and functions on the Polkadot Blockchain*** https://bitcoinmeister.eu/polkadot/ **NEO (NEO)** ***operates and functions on the NEO Blockchain*** **TRON (TRX)** ***operates and functions on the TRON Blockchain*** https://bitcoinmeister.eu/tron/ **Note Blockchain (NBTC)** ***operates and functions on the NOTE Blockchain*** https://bitcoinmeister.eu/note-blockchain/

The second big difference is that the **Coins are mostly Minable**. Because **Blockchains need Miners to maintain the Blockchain**, **secure it and validate transactions**.   So on the contrary, **Tokens work on a Blockchain that allows to create and Host them** (while they belong to another Coin), such as:  the **Ethereum Blockchain**, with Tokens of type ***ERC-20*** & Tokens of type ***ERC-721*** the **NEO Blockchain**, with Tokens of Type ***NEO-5*** the **Tron blockchain**, with Tokens of Type ***TRC-10*** You can also create tokens on a multitude of other Blockchains such as:  ***Stellar*** ***QTUM*** ***Waves***  ***Ethereum Classic*** ***CounterParty*** ***EOS*** ***Minter Network*** ***OMNI*** ***NEM …***   Concerning the **Coins**, you have to **think of them as a 'Currency' in their own right**. Because they have the **same characteristics as the Money Coins**: ***Exchange intermediary/Money transfer*** (allows to buy online, or in store ..) ***Reserve of value*** (can be stored to be sold later, hoping to make a profit) ***Unit of account*** (allows to set a value with this currency) "***A currency is characterized by the confidence its users have, in its ability to serve as a medium of exchange.***"

Let's cite these examples:  **Bitcoin (BTC)**, Pays ***transaction fees***, ***rewards miners*** of the ***Bitcoin Blockchain*** https://bitcoinmeister.eu/bitcoin/ **Ether (ETH)**, Serves as ***fuel/gas for the platform***, allows for the execution of **Smart Contracts**, ***transaction fees***, as well as all Tokens created on the Ethereum Blockchain (Type ***ERC-20 & ERC-721***) need ETH to be initiated, and pay for transaction fees as well as sending Tokens. https://bitcoinmeister.eu/ethereum/ https://bitcoinmeister.eu/smart-contracts-use-cases/ **Ripple (XRP)**, ***Pays Network Fees***   Unlike **TOKENS**, which can ***eventually serve as a Unit of Account and "theoretically" a Reserve of Value***, but do not include any of the other fundamental characteristics of the Currency. The ***advantage of creating a Token***, is to ***create a Cryptocurrency***, ***without having to create a Blockchain*** (as well as a Coin), by using pre-established Scripts (ERC-20, NEO-5, TRC-10 ...). So **saving time and money** Generally issued during ***ICO/STO***, there are various types of Tokens: https://bitcoinmeister.eu/what-are-icos/ ***Security Tokens*** ***Equity Tokens*** ***Utility tokens*** ***Payment Tokens***. Depending on the type of Token, you can enjoy **premium or advanced options on dApps**, you can **own some shares of a Token issuing company** (Security Tokens), or you can **use a service**, once it is developed after the ICO. Some examples of Tokens are: ***Tether USDT (USDT)*** ***Binance Coin (BNB)*** ***Basic Attention Token (BAT)*** https://bitcoinmeister.eu/basic-attention-token/ ***Spice Token (SPICE)*** ***Crypto Kitties*** ***NFT (Tokens Type ERC-721)*** **Conclusion** **Coins**, **like Tokens**, **are Cryptocurrencies**, they are : ***Fungible***, ***Divisible***, ***Portable*** and have a ***Limited Offer*** (for a very large majority of them) **Coins are Native Units of a Blockchain**, whose existence is essential to the survival of the Network.   **Tokens are non-Native Units of a Blockchain**, which it (Blockchain) does not depend on it (Token) to function. Because they are created through an existing Blockchain, depending on a Coin.    **Some Blockchains need the Native Coin to create**, **and perform Token Transactions**:  ***Ethereum Blockchain - ETH*** ***NEO Blockchain - Gas*** ***Minter Network Blockchain - BIP ...***   Remember also that a **Cryptocurrency can appear as a Token first**, and **then migrate to its own Blockchain and become a Coin**, such as **Rapids Network** and its Cryptocurrency **Rapids (RPD)** https://rapidsnetwork.io/ https://rapidsexplorer.io/

See you soon **Christophe WILHELM** **Bitcoin Meister** https://bitcoinmeister.eu/?ref=12 **© Bitcoin Meister**   Source pics: **Google** http://www.google.com/     Resources https://bitcoinmeister.eu/ http://explorer.notebc.io/ https://rapidsnetwork.io/