Crypto Tokens vs Coins Whats the Difference?

What they share in common is the use of the distributed ledger technology known as the blockchain. To understand tokens, it’s helpful to realize they come in different flavors. Utility tokens, for example, blur the line between coins and tokens.

cryptocurrencies VS tokens differences

There are also synthetic tokens that mimic the price of other assets, such as cryptocurrencies, stocks, and other financial instruments. Unlike wrapped tokens, synthetic tokens representing coins can not be changed into the original coin. The sole purpose of payment tokens is to provide a means of payment. These tokens do not interact with blockchain-based applications in any unique way, unlike utility tokens. This is usually done through an initial coin offering where coins are sold to the investors. After the launch of the project, tokens serve as their currency and provide customers with access to various features.

Token vs Coin: Conclusion

The value of a coin or token can change rapidly, and there’s no guarantee that blockchain technology won’t be surpassed, banned by law or co-opted by central banks. Also, digital wallets have often been hacked and their contents have been stolen. Always keep these risks in mind when engaging with coins and tokens. In fact, thanks to the creation and facilitation of smart contracts, the most common blockchain token platform are Ethereum. Tokens that are built on the Ethereum platform are known as ERC-20 tokens.

  • They’re known as Security or Asset Tokens, Payment Tokens, Equity Tokens, and Utility Tokens.
  • And while they are both units of cryptocurrency, coins and tokens do have different functionalities.
  • Each transaction is protected by encryption and is accessible by any member of the network.
  • The fact that BTC is on its native blockchain is the reason it’s a coin rather than a token.
  • Nothing contained herein shall constitute a solicitation, recommendation, endorsement, or offer by Crypto.com to invest, buy, or sell any coins, tokens, or other crypto assets.

Because you can not create a coin without building a blockchain, that means it is not easy to launch a coin. A type of cryptog