Coins vs Tokens

Categorization of assets

What are Crypto Coins?

Coins are digital assets that are native to their own blockchain. They are independent and operate on their own networks. Examples of coins include Bitcoin, Ethereum, and PAW Coin. These coins exist on their own independent ledgers and can be sent, received, or processed.

Coins share certain characteristics with traditional forms of value exchange: they are fungible, divisible, portable, and limited in supply. They are primarily used as a medium of exchange. However, some coins, like Ethereum, go beyond their "value exchange" role as they are used within their respective blockchain to facilitate transactions.

What are Crypto Tokens?

Tokens are digital assets that operate on an existing blockchain network. They do not have their own blockchain but require another blockchain platform to operate. Ethereum is the most common platform for creating tokens, primarily due to its smart contract feature. Tokens created on the Ethereum blockchain are known as ERC-20 tokens.

Tokens aim to offer a wider range of functionalities compared to coins. They can be used as a means of payment, but their primary purpose is often to provide access to a project's functions, such as DAO voting.

The Roles of Coins and Tokens

Both coins and tokens have roles in the cryptocurrency ecosystem. Coins provide the foundation for secure and decentralized networks, while tokens enable the development of Decentralized Applications (dApps) and other blockchain-based platforms. Together, they contribute to the diversity and versatility of the cryptocurrency space, facilitating a variety of use cases and applications.