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Cryptocurrency FAQ - The difference between a coin and a token

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Avatar for pusher
Written by   32
1 year ago

A lot of people treat the words "coin" and "token" as the same thing when they discuss cryptocurrencies or blockchain projects. But is there a difference between those two terms? The answer is YES! There is a subtle difference between them, and it's important to understand it if you are starting to learn about cryptocurrencies.

What's a simple definition of a coin?

A coin will have its own unique blockchain code.

The principle use case for cryptocurrency coins is payment.

How is a token different from a coin?

A token does not have its own unique blockchain. In fact, it is built on top of another blockchain.

Many tokens were designed to be used on top of the Ethereum blockchain, and intended to operate within the Ethereum ecosystem. Because of this, any transaction associated with these types of tokens (moving tokens to another wallet address, checking wallet balance, etc.) requires ETH to process it.

Thanks for reading, and stay safe!

Last updated October 18, 2020

Cover image by loufre (modified by the author) from Pixabay 

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Avatar for pusher
Written by   32
1 year ago
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Comments

I used to use them interchangeably, lol! Thanks for pointing that out in a simple way.

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1 year ago

Glad you found it useful...thanks for visiting! =)

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1 year ago

Thank you for this article. It's simple and clear enough for a layman to understand. I also appreciate that it is brief and doesn't go into all the techo babble about blockchain. Look forward to more. Keep writing, buddy so I can learn from you. 😃

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1 year ago

thanks for the kind words! when i started learning about crypto, there was so much that was confusing for me. u can see in my previous reply to you that i have set a new, long-term plan in motion. =)

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1 year ago

You know that even now I cannot clearly explain this to others. That's why I use asset for both coin and token

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1 year ago

back to basics my friend...and part of my new overall, long-term strategy for my brand.

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1 year ago

A brand needs time to consolidate

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1 year ago

rusty just stopped by my post if you were wondering...Lol

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1 year ago

Lol...yes...long-term strategy. 😉

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1 year ago