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The difference between a coin and a token

The difference between a coin and a token

By Daniel

March 26, 2024

If you're new to the world of cryptocurrencies, you may have heard the terms "coin" and "token" used interchangeably. While they share some similarities, there are key differences between the two.

Coins

Coins are the native currency of a blockchain. They can be used to transfer value between parties and as a store of value. Some examples of coins include Bitcoin, Ethereum, and Litecoin. Coins typically have their own blockchain and are often used as a means of payment or investment.

Tokens

Tokens, on the other hand, are assets that are created on top of an existing blockchain. They can represent anything from real-world assets such as gold or real estate to digital assets such as in-game items or loyalty points. Tokens are often created using smart contracts on a blockchain such as Ethereum and are compatible with the Ethereum network. Examples of tokens include ERC-20 tokens like Chainlink and UniSwap.

Key Differences

The main difference between coins and tokens is that coins are standalone currencies, while tokens are built on top of an existing blockchain. Coins are often used as a means of payment or investment, while tokens can be used for a wide range of purposes beyond just transfer of value. Another key difference is that coins typically have their own blockchain, while tokens use the infrastructure of an existing blockchain. Coins can also be mined, while tokens are created using smart contracts. In summary, while coins and tokens may seem similar at first glance, they serve different purposes in the world of cryptocurrencies. Understanding the difference between the two can help you make informed decisions about which cryptocurrencies to invest in and use.

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The difference between a coin and a token

Coins

Tokens

Key Differences

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