How is Crypto Token different from Crypto Coin?

3 mins, 14 secs Read
Updated On December 22, 2023

Cryptocurrency coins and tokens are often misunderstood as the same thing, but they’re two distinct items in the crypto world. Put simply, cryptocurrency coins refer to cryptocurrencies that operate with their blockchain. On the other hand, a cryptocurrency token is coded and released on an existing layer one blockchain network; it does not possess its very own separate chain of blocks. Planning to invest in Bitcoin? Bitcoin Sprint trading platform offers a variety of tools and resources to help you get started.

Coins and tokens are two primary forms of cryptocurrency. While the coins like Bitcoin, run on their blockchains, tokens are introduced to work within a much large platform built on an existing blockchain like Ripple or Ethereum. In the article, we will be discussing the major differences between these two cryptocurrencies and how are they used in the market. 

About Crypto Coin

Cryptocurrency coins are digital assets native to blockchain networks, which can be traded and used as mediums of exchange or stores of value. Issued directly by the underlying protocol, such coins offer much more than mere payment capabilities—they allow users to make use of a range of features when participating in that particular blockchain ecosystem.

Some popular crypto coins are:-

  1. Bitcoin – Bitcoin is the oldest and the most valuable cryptocurrency in the world. It was launched back in 2009 by Satoshi Nakamoto (name used by the developers). 
  2. Dogecoin – Dogecoin is initially released in 2013, by two software engineers who decided to build a payment system as a joke in reference to cryptocurrencies at the time.
  3. Tether – Launched in 2014, Tether is an asset-backed crypto stablecoin. Tether is owned by a Hong Kong-based company that also owns the Bitfinex Crypto exchange.

Now, let’s jump to the crypto tokens. 

Meaning of Crypto Token

Crypto tokens are a specialized form of cryptocurrency based on existing blockchains. For instance, if a Web3 project has produced an amazing product and service, they could create a crypto token that’s compatible with the Ethereum blockchain to be used by their customers. These coins are referred to as ERC-20 Tokens.

The terms could be perplexing since these crypto tokens are much like crypto coins, though they’re blockchain-based assets (such as coins) that have value and also may be delivered and also received. Tokens aren’t called coins, though, because they’re issued on a current blockchain network, for example, BNB, Solana, along with Ethereum, rather than operating by themselves.

Some of the well-known crypto tokens in the market are:-

  1. Uniswap – It is a decentralized crypto exchange, It falls in the category of DeFi products and is an open-source project. It also uses a set of smart contracts to execute trades on its exchange.
  2. Ripple – Ripple was created by a U.S.-based tech company and is a real-time gross settlement system.

These were some of the famous crypto tokens, let’s now see the difference between both of them. 

Differences: Crypto Coin Vs. Crypto Token

A non-tangible object called a digital asset is made, trading as well as kept in an electronic format. Within the context of blockchain, the electronic property consists of crypto tokens as well as cryptocurrencies. Cryptography, an advanced encryption technology that assures the authenticity of digital assets through the elimination of the possibility for counterfeiting or two-fold spending, differentiates tokens and cryptocurrency as distinctive subclasses of electronic assets.

Coins such as ETH or BTC tend to be the indigenous assets of a blockchain, while tokens are produced on a platform based on a current blockchain, just like the countless ERC 20 tokens which comprise the Ethereum ecosystem. That is the distinction between the two types of digital assets. Cryptocurrencies are electronic assets that may be exchanged on a blockchain system, utilized as a method of exchange and saved as a storage of value. A cryptocurrency is frequently called the indigenous currency of any blockchain, as the blockchain protocol straight-issued them. 

Cryptocurrencies usually act as a medium for the exchange or storage of value. A medium of communication is a source that is utilized to purchase services or goods. Crypto tokens, or tokens, on the flip side, are units of worth that blockchain-based initiatives or maybe organizations produce on already existing blockchain networks. Despite being frequently in good relation to the coins from this system, they fall into a different group of digital assets. Tokens are created by platforms set up in addition to blockchains. Ether, as an example, is the official cryptocurrency associated with Ethereum (ETH) blockchain. CryptoKitties, LINK, COMP, and DAI are several of the crypto tokens developed with Ethereum. These tokens can be utilized for a variety of activities on the platforms that they are created, including participating in video games, taking part in decentralized financial methods (DeFi), and obtaining platform-specific services.

Author: Joseph Williams