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Crypto Tokens vs. Coins: What’s the Difference?

Crypto Tokens vs Coins

Anyone who has dealt with cryptocurrency knows that while the coins and tokens are entirely different entities, they are very similar on many levels. So, it’s no wonder many individuals in Canada and worldwide find it difficult to distinguish between the two cryptocurrency items. The apparent confusion dates back to 2009, when Bitcoin launched with absolutely no competition, initially forming the basis of what a cryptocurrency should look like.

Many people took most of Bitcoin’s characteristics to apply to the larger cryptocurrency group. And even when it came to the mainstream adoption of cryptocurrencies, Bitcoin was the first to be accepted on crypto-friendly websites like slots online Canada gaming platforms. As you would expect, the Bitcoin cryptocurrency was also pioneered as a payment option in Canadian institutions. For instance, Simon Fraser University started accepting Bitcoin donations back in 2014 and later embraced this cryptocurrency as an acceptable currency to purchase textbooks for students.

Yes, most crypto tokens and coins share the same principles that were used in the formation of Bitcoin. However, many of them are fundamentally different. Take a few minutes to read our beginners’ guide to draw a clear distinction between these two often confused terms.

Crypto Coins

Rightly so, Bitcoin is the most famous crypto coin and has thus formed a clear narrative on what a crypto coin should look like. So, a crypto coin has the following two main characteristics:

  • A crypto coin operates its blockchain – The blockchain keeps track of all the transactions that the Crypto coin has processed. Think of it this way: when you use a Bitcoin to pay someone, the receipt of that transaction goes to the Bitcoin blockchain network.
  • Coins can be used as money – Crypto coins like Bitcoin can essentially be used as an alternative to traditional money. They are even seen to be more secure and reliable owing to the trusted blockchain technology network within which they operate.

Typically, coins are the infrastructure and backbone of blockchain technology and therefore retain a higher intrinsic value when compared to crypto tokens.

Crypto Tokens

The underlying feature that sets cryptocurrency tokens apart from coins is the fact that crypto tokens are built on another cryptocurrency’s blockchain. So, while every single cryptocurrency is built on a blockchain, tokens lack their own native blockchain. Consequently, these tokens have to depend on the blockchain of other cryptos.

It may seem like a terrible idea at face value, but the existence of crypto tokens is good for the crypto world. Using another cryptocurrency’s blockchain technology makes the process of developing cryptos to be much easier, faster, and less expensive.

Comparison between Crypto Coins and Crypto Tokens

Much of the coin-token comparison has already been laid out from the definitions we have just looked into. However, for an even better perspective to help you distinguish the two, think of it this way: a blockchain can only have one cryptocurrency coin but can support multiple tokens. So, taking the Ethereum blockchain as an example, Ether is the cryptocurrency native to the blockchain. But then, there are so many other tokens that use the Ethereum blockchain; some of the most popular include the likes of Uniswap, 1Inch, Matic, Link, and USDT.

Based on recent events, the fact that it is easier to create a crypto token as opposed to a coin isn’t entirely a good thing. There have been many reported cases of scams and lackluster projects in the name of crypto tokens. Nonetheless, this doesn’t in any way mean that all crypto tokens are bad investments. It just means that you have to be more careful when investing in crypto tokens so that you can make the right investment decisions. Check out the tabulated comparison of the two main types of cryptocurrencies for a better understanding:

Crypto CoinsCrypto Tokens
Are built on their own blockchain.Built on top of existing blockchains from other cryptocurrencies.
Can be used as an alternative to government-regulated currency.Can’t be used as an alternative to government-backed currency. However, they can be used for transactions for real-world items like digital assets and electricity.
Harder to develop.Easier and faster to make since they use existing blockchains from other cryptocurrencies.
Higher intrinsic value than tokens.Lower intrinsic value than coins.
Examples: Bitcoin, Ether, Binance CoinExamples: Tether, Uniswap, Chainlink

What About Altcoins?

Now that you understand the difference between crypto coins and tokens, there’s one more critical definition you need to understand – the Altcoins. Some people often confuse Altcoins as another type of cryptocurrency, listing them beside crypto tokens and coins, which is entirely wrong. However, the term “Altcoin” is simply the shorthand for “Alternative coins.”

They simply refer to any and all other cryptocurrencies in existence apart from Bitcoin. They include Ethereum, XRP, Tether, Litecoin, Cardano, Bitcoin Cash, Dogecoin, Stellar Lumen, and Uniswap, among many others.