The Difference Between Coins and Tokens

It is important to know that all coins or tokens are cryptocurrencies. Many people think it is very similar, but they refer to two completely different concepts. All coins and tokens are related to the cryptocurrency. Currency is a medium of exchange, unit of account or a store of value. A coin which holds all these features is Bitcoin. All the other coins and tokens which started after Bitcoins were named "cryptocurrency". Many of them do not hold or fulfill all the necessary characteristics like Bitcoin. So coins and tokens are named cryptocurrency.

Alternative cryptocurrency coins are also called altcoins or coins. Examples of altcoins are variants of Bitcoin, codes are Namecoin, Dogecoin and, Litecoin. There are other coins which did not derive from Bitcoin's open-source and created their own blockchain and protocol, for example, Ethereum, Ripple and Cardano. Coins are just a method of payment. With coins you can buy and sell. You can buy a token with a coin, but not vice versa. Coins have the same characteristic as money.

Tokens will usually be created on an existing blockchain for Example Ethereum. Creating tokens is easier because you do not have to modify the codes from a protocol or create a blockchain from scratch. This allows anyone to create a token in just a few steps because you use a standard template. Tokens can also represent basically any assets that are fungible and tradable.

Coins are just a method of payment while tokens may present a company's share. Coins can be used for buying and selling things. Coins operate independently, while tokens have a specific use in the project's ecosystem. Coins are built on their own blockchain and tokens are usually issued on top of another blockchain.


 

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