Crypto on Paper: Episode 14 – Coins vs Tokens: What’s the Difference?
Scrolling through today’s crypto trends, you’ll probably see terms like “token coin” or even coins like XCN crypto popping up everywhere. But wait, aren’t all cryptocurrencies just… coins?
Not exactly. In the crypto world, there’s a big difference between a coin and a token. And if you’re starting out in trading or investing, knowing this difference will save you from plenty of rookie mistakes.
Lesson 1: What is a Coin?
A coin is a cryptocurrency that operates on its own blockchain.
- Examples: Bitcoin (BTC), Ethereum (ETH), Solana (SOL).
- They’re like the main currency of a country, native, original, and powering everything else that happens there.
Coins are mostly used as money (payments, transactions, store of value).
Lesson 2: What is a Token?
A token is a cryptocurrency that is built on another blockchain.
- Examples: USDT (Tether, built on Ethereum), SHIB (Shiba Inu, built on Ethereum), MATIC (originally a token on Ethereum).
- Think of them as apps running inside a country. They use the blockchain’s existing roads and rules, instead of building their own.
Tokens are usually used for specific functions:
- Utility (paying fees inside a platform),
- Governance (voting in a project),
- Or representing assets (like stablecoins or NFTs).
Lesson 3: Why Traders Need to Know the Difference
Here’s where it matters:
- Coins (like BTC, ETH, SOL) usually have stronger long-term fundamentals. They’re like “blue-chip stocks” in crypto.
- Tokens can be riskier, but they often provide huge short-term opportunities, especially meme tokens or project-specific tokens.
If you don’t understand whether you’re trading a coin or a token, you might misunderstand its value, risk, or potential growth.
Quick Test: Coin or Token?
- Bitcoin → Coin
- Shiba Inu → Token
- Solana → Coin
- USDT → Token
How many did you get right?
Final Word
Today’s trends might hype up a “token coin,” but now you know better: coins and tokens aren’t the same thing.
- Coins = native currency on their own blockchain.
- Tokens = built on top of another blockchain, with specific uses.
As a trader or investor, always check: Is this a coin or a token? The answer can tell you a lot about its long-term value and short-term risks. Learn more about Cryptocurrency Trading and Investing. Start trading coins and Tokens on Zabira.
