What is the Difference Between a Token and a Coin?
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Although the terms “coin” and “token” are often used interchangeably, they have different meanings.
Coins and tokens are cryptocurrencies that rely on blockchains to function, but each has distinct features.
A coin is a cryptocurrency that powers a blockchain. Examples include Bitcoin and Ethereum.
In addition to being the native currency of the blockchain, coins are also used as a means of payment for transactions.
Unlike coins, tokens are created on existing blockchains.
While they can be bought, traded, and sold just like coins, they're generally not mediums of exchange.
Instead, they’re usually created in order to provide benefits within a single blockchain ecosystem.
They can serve various purposes, such as giving you voting powers, signifying part ownership in a company, or representing a certain value.
You can think of tokens as a currency for an amusement park — they give you access to the rides and games within the park, but they can’t be used to pay for things outside the park.
Tokens and coins are both cryptocurrencies, so they share characteristics, including the ability to be divided indefinitely, to be exchanged, as well as durability against malicious attacks.
Are stablecoins considered coins or tokens?
Hint: Stablecoins are not native to a blockchain the way that coins like Bitcoin and Ethereum are.
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