Bitcoin, Cryptocurrency, Currency, Economy, Trading


Investing in assets backed by coins and tokens is speculative and holds a higher level of risk. When dealing with risk, both losses and profits are made simultaneously. Making profits on investments or trade doesn’t imply a steady win-win game.  In the digital currency space, common terns are usually used which coin and token are one of the popular terms. Sometimes,  these terms are used interchangeably, but the truth is there is a distinction between them. Coin and token are classified under different categories in the digital currency platform, and the ability to understand what they represent is vital to knowledge. 

Difference between coins and tokens

Both coin and token are used to represent a unit of blockchain value. This is just a basic difference. Importantly, coins are used as a unique digital currency based on their own blockchain, while tokens are created and hosted on the existing blockchain. The understanding of these will help give a clear difference. 


Token represented here are built on existing blockchain, and the most common platform for tokens is the Ethereum network. These tokens built on Ethereum are referred to as ERC-20 tokens, and tokens built on NEO are referred to as NEP-5 tokens. However, there are other tokens like Omni,  Stellar,  EOS, and NEO. Examples of tokens are Golem (GNT), Basic Attention Token (BAT), and Ox (ZRX). The existence of these tokens is on the Ethereum blockchain. 

However, Cryptocurriencies and altcoins are virtual currencies with their specific blockchain and are dedicated primarily as a medium of digital payments. Although cryptocurrency token operates at the top of the blockchain technology serving as a means for creating and executing decentralized applications and smart contracts, they are also used to facilitate payments just like a coin. 

The majority of the tokens that exist are meant to be used with a decentralized application or Short DAPPs. Once these tokens are built, they activate features on the application they created. However,  since these tokens are built to be used on a DAPP, their purpose is determined by the application itself. 

For instance, in writing DAPPs,  those tokens built for it allow users to write on it. Gaming DAPPs, its tokens grant users access to play games on it. Likewise, music DAPPs grants users access to features like streaming songs and watching music videos.  In creating new tokens, the developers can decide the number of units they would prefer to make and the tokens’ destination once they are created. Tokens and DAPPs unites a shared blockchain in which different applications may run.

Creating a Token

In creating a token, the requirement involves following a standard template already on the blockchain, including NEO or Ethereum space that gives you access to create your own token. Tokens are easier to free compared to coins. Creating a new token does not demand creating a new blockchain, which halves resources and time. The security of one of the native blockchain technology like Ethereum is already an added advantage. Preexisting token spaces have a huge network of miners that are readily available to verify transactions. 

Coin, unlike tokens, are assets that are built on their own blockchains, such as bitcoin (BTC), Litecoin (LTC), Ontology (ONT), and Ether (ETC), and they are tradable on various coin based market platforms. The popular coin is bitcoin. People worldwide use bitcoin to make purchases of goods and services. Make both long and short-term investments and trade for other currencies globally. 

Today, coins are majorly used for monetary transactions, notwithstanding coins have their other use cases. For instance, tokens are built on the Ethereum platform, but Ether must send a token. Ether coins are also used to channel transactions on the Ethereum network. Ether funds those computers that verify transactions made on the Ethereum platform, which can also be referred to as mining cost.

However, coins have other functionalities added to it, but it is majorly used to pay for transactions made. Coin as a medium for buying goods and services is practiced daily. This is increasing the popularity of cryptocurrencies and their value as well.

FunDigitalof Digital Coins

An additional functionality of the coin is DASH. Users that hold a certain amount of DASH are given access to vote on important decisions in the DASH platform. For instance, if there’s a suggestion regarding an upgrade on the dash platform, only those holding a good amount of DASH are eligible to vote, and decisions regarding the results must be accepted. The holders of DASH have the power to approve how the project evolves based on their voting rights.

Where are Coins and Tokens stored?

Tokens and coins are both stored in a digital wallet. This digital wallet has two types the hot wallet and cold wallet. The cold wallet, which is often referred to as cold storage, is particularly stored offline. In contrast, the hot wallet needs to be connected to the Internet to enable everyone from different parts of the world to access it. These wallets are compatible with their different platform whether the coin platform or token platform. The numerous wallets that can build on the Ethereum platform and advertise these tokens are compatible with ERC-20.

Sinits own blockchain backs the Ethereumain, and it can be called a coin. This implies that if you have a wallet supported via the Ethereum blockchain, all assets associated with it, such as the ERC -20 tokens, are compatible with your wallet. Not all Ethereum based assets are displayed on the wallet, depending on the type of wallets. Tron is a popular ERC -20 token. Tron’s network has its own native token after releasing won the main net be fusing use using the ERC -20. 

Uses of Coins and Tokens

Using Coins and Tokens

Another difference between the coin and token is that coin is usually used for payments. Still, the token, on the other hand, has various use cases like payment and other transactionary activity. For example, when we compare a coin to a utility token, the utility token is used to acquire a product or service. The Basic Attention Token (BAT) is popularly used in the Brave Web Browser Community.  Publishers and audiences are paid by advertisers using the Basic Attention Token (BAT ) system. The audience receives a BAT from partaking in advertisers’ ads while the audience uses BAT to donate. 

Take real-life uses, and these include asset tokens, which are backed by real-life assets such as natural mineral resources (Diamonds, Gold, Silver), Real Estates. Security tokens are securities of the old financial system;  they represent shares and their benefits from blockchain technology. Stablecoin are relative to cryptocurrencies like bitcoin and curriences like Euros. Non-fungible tokens are represented by unique things such as Golf, Unique virtual pets, and Artistic works. 

Generally,  the cryptocurrency space agrees that coin seven as a method of payment. At the same time, token functions at the top of the blockchain and grants access to a DAPP to give the project the ability to function. 

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