The difference between Tokens and Coins

A detailed comparison between tokens and coins

Today’s content is all about clearing the confusion of most of the folks who are new to cryptocurrency and don’t understand the difference between Token and Coin.

The confusion is considerable that many people when using the word ‘Coin’ other call it ‘Token’. However, tokens and coins are two different terms with different meanings. There are many major differences between coins and tokens in cryptocurrency. But don’t fret!

This blog will give a detailed comparison between the crypto token and crypto coin to clear out the confusion.

Let’s have a look ahead!

What is a Coin?

Coin cryptocurrencies are known by different names including digital coin, Bitcoin, altcoin and crypto coin. It is the primary unit of cryptocurrency. Moreover, it is an autonomous digital currency whose function is not dependent on a platform. So, when you hear someone talking about Bitcoin or altcoin, it is talking about coins. A coin is primary an asset belonging to its own blockchain.

To make it more clear:

  • Bitcoin drive and operates on the Bitcoin blockchain
  • Ether is known to function and drive on the Ethereum blockchain
  • NEO operates on the NEO blockchain

How to use a coin?

The use of digital coins is the same as of the real-life coin. So, the purpose of this coin is similar to the coins you use in real life. You can use these coins to pay for any product or service you used on the internet. Even bitcoins can be used in many brick and mortar stores as well. You can keep the coins for a long time with you and whenever you need something of the equal value you can swap it.

So, it is important to know that bitcoins serve the monetary purpose only. You cannot use bitcoins for any other purposes. You cannot use it to drive any other application.

However, digital coins including Ether, DASH, and NEO have some other purpose to serve rather than the monetary ones. Like:

  • You can use Ether to fill transactions on the network of Ethereum. You can build tokens on Ethereum but still, you require Ether (Coin) for sending the token.
  • NEO is claimed in a wallet to gain dividend. This dividend is termed as GAS. You can also build tokens on NEO, but at the time of transferring a token you require to pay a transaction fee (GAS)

What is a Token?

Many people think tokens and the digital coins are the same but this is absolutely untrue. There is a significant difference between token and digital coin.

Tokens are built on extant blockchains including Ethereum which is the most frequently used token platform. These tokens are termed as ERC-20 tokens. Apart from the commonest platform, there are some other platforms like NEO, Lisk, Stratis, and Waves.

You can easily build a custom token on any of the above-stated platforms. Tokens have an essential role to play as it helps the blockchain companies in decision making.

 How to create Tokens?

Building token requires a bit of technical ability on your part. It is therefore not suggested to a newbie to try creating tokens. However, if you have sort of programming knowledge, it would not take much time for you to create your own custom tokens.

Moreover, if you are building a token on Ethereum, you need to use up Ether (Coin) to get the approval of the token transaction by miners of the network.

The Uses of Tokens

Tokens can be used to satisfy any one or more of the below-stated conditions.

  • You can use the token as a digital currency
  • You can use it as a digital asset
  • You can use it as a mode of payment
  • You can use it as a mean of accounting
  • It can be used as a part in any start-ups

Purpose of Tokens

You can use the tokens according to your wish. It is a kind of investment which you can make by simply paying the cryptocurrency fee.

For instance, a decentralized application token is Musicoin. You can use this token to get the excess of music platform such as watching any video or playing any song.

In the same way, you can use tokens to depict a physical identity in active contracts. A decentralized application representing a physical entity includes WePower. this platform helps you in buying and selling electricity as this token act as the amount of energy.


Wrapping up!

Hopefully, this clock has helped you in getting a fair understanding of both the terms.  So, you need to keep in mind that coins and tokens are only the same in the case when you are talking about making payments. However, tokens have much more to do for you then paying your payments.

Tokens are much more diverse than coins and have larger applications whereas, coins are a digital substitute to traditional money. Coins are just the native of their blockchain while you need to create tokens on the top of any other blockchain which include paying a fee in the form of respective coins.

To keep learning check out the difference between cryptocurrency and fiat.


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The difference between Tokens and Coins





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