Today I'll be talking on a topic that has confused a lot of people especially those who are new to cryptocurrency.

Sometimes people use the term “coin” to refer to what other people call “tokens” and vice versa.

But what are the differences between them.

What is a Coin:

The definition of a digital coin is an asset that is native to its own blockchain. Think about Bitcoin, Litecoin, or Ether. Each of these coins exists on their own blockchain.

To understand it better..

• Bitcoin operates and functions on the Bitcoin blockchain

• Ether operates and functions on the Ethereum blockchain, and so on.

All the “coins” exist as data on a giant global database. This database (or blockchain) keeps track of all the transactions and is checked and verified by computers around the world.

What is a Token:

Tokens often get called digital coins. However, this isn’t correct. There is a major difference!

Tokens are created on existing blockchains. In fact, thanks to the creation and facilitation of smart contracts, the most common blockchain token platform are Ethereum. Tokens that are built on the Ethereum platform are known as ERC-20 tokens.

However, there are others such as NEO, Waves, Lisk, and Stratis. While, as mentioned above, tokens on the Ethereum platform are known as ERC-20 tokens, NEO uses tokens known as NEP-5 tokens.

Anyone can make their own custom token on one of these platforms.

So now what's the difference.

And so in sum, the simple explanation of the difference between coin vs. token is that a coin has its own blockchain, while a token doesn’t.

Another thing to note is that coins usually are used for 1 thing (payments), while tokens have various use cases, which can include payments but also other things. For instance, when comparing a coin or cryptocurrency vs. utility token, utility tokens are used to access a product or service.

For example, Basic Attention Token (BAT) is used in the Brave web browser ecosystem. Advertisers pay publishers with audiences in BAT, audience members receive BAT for viewing advertisers’ ads, and audience members can use that BAT to donate to publishers or keep the BAT for themselves.

Hope this helps. 😉