Blockchain and Cryptocurrency Beginner - Differentiating Between Token and Coin
In the cryptocurrency world, the term coin and token are two of the main terms associated with cryptocurrency. Both coin and token are the main aspects of cryptocurrency technology.
Token
A token is basically an asset that operates on another existing blockchain. This means that a token is built and deployed on another blockchain network without the need to have its own blockchain. A token can run on multiple blockchain at the same time like USDT, ANKR, etc. Also, Like every other cryptocurrency asset, the value of any cryptocurrency token that runs on an existing blockchain is derived from the demand and supply of the token. Unlike a coin, a token can have so many use cases such as; store of value and can be traded on exchanges, digital currency, used to assess special services or offers, used within a specific ecosystem. In cryptocurrency, a token can be deployed on any blockchain and can also run on multiple blockchains. Examples of cryptocurrency tokens are ANKR, UNI, SHIB, CAKE, etc.
A token is a lot more easier to create because and doesn’t require full understanding on how blockchain works and the building of blockchain. There are various tools that allow anyone to create a token on popular blockchain networks such as Ethereum, Binance Smart Chain, Tron etc. In order for an individual to create a token on any existing blockchain, the individual must first of all decide on which blockchain to create the token on and also the individual must have a clear understanding of the blockchain the token will run on, and then look for the necessary tools and materials such as docs, guilds, manuals available to aid in the successful launching of the token on the selected blockchain. Once the token is created and deployed on the existing blockchain, the token will run on that blockchain and would adhere to the operations of the underlying blockchain.
Coin
A coin is basically an asset that runs on its own blockchain. This means that a coin is built on its own blockchain. Like every other cryptocurrency asset, the value of any cryptocurrency coin that runs on its own blockchain is derived from the demand and supply of the coin. One of the main purposes of a coin is for payments or to serve as a digital currency or digital money. Also, a coin is meant to be a store of value or exchange of value. In cryptocurrency, a coin does not exist without its own blockchain. Examples of coins are bitcoin, ethereum, litecoin, etc. A coin is more difficult to create because it requires a clear understanding of how blockchain and cryptocurrency works, and also how to build a blockchain. As a result, there are many processes involved before a coin is created.
In order for an individual to create a cryptocurrency coin, the individual must first of all understand how blockchain and cryptocurrency works before venturing into building a blockchain and creating a coin. Also, the individual must also decide on which consensus mechanism the blockchain uses as it will also influence the creation of the coin. The process begins with the building of a blockchain and then the coin is deployed on the blockchain. With this, the coin becomes the native cryptocurrency coin of the blockchain. For example, BTC is the native coin of the bitcoin blockchain, LTC is the native coin of the litcoin blockchain, DOGE is the native coin of the dogecoin blockchain etc.
Difference between coin and token
A coin runs its own blockchain while a token runs on other existing blockchain. Example of a coin is bitcoin and it runs on the bitcoin blockchain. Example of a token is UNI token and it runs on the ethereum blockchain.
For coin, a blockchain must be built before a coin is created and deployed. While a token can be created and deployed on any existing blockchain.
A coin exist on one blockchain. Bitcoin only exist and runs on the bitcoin blockchain. While a token can exist on multiple blockchain networks. USDT runs on the ethereum blockchain, tron blockchain etc.
A coin is primarily a digital currency and a store of value. While a token can have multiple use cases such as an asset to access special features on a platform, digital currency, specific privileges on a platform, discounts, etc.
