Crypto Coins vs Tokens; Is There a Difference?

Crypto Coins vs. Tokens; Is There a Difference?

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The answer to this question is yes. There is a difference. But everybody has confused a token and a coin at some point. In truth, the two are very much alike, fundamentally. Both represent a store of value, much like fiat currency, be it dollars, euros, pounds, or yen. But there is a crucial difference between the two; coins are a form of money, and digital tokens represent something that can be assigned a value.

It’s a case of utility; there are things you can do with coins that you can’t do with tokens, but there are also places that will only accept tokens, giving them more excellent utility.

In this article, we’ll review some differences to ensure you won’t ever get confused again!

What is a crypto coin?

Different qualities separate a coin from a token, which is more similar to traditional money. The three following characteristics define a coin:

Operates on its blockchain: A coin must have a blockchain that keeps track of all the transactions in which the coin is involved.

It acts as money: Bitcoin was specifically invented to replace traditional money. The appeal of a new, more level system inspired the creation of other coins.

Can be mined: Crypto coins can be earned through traditional mining on the Proof-of-Work system. This becomes a more complicated process over time, as there are fewer and fewer coins to mine as time goes on.

What is a token?

Unlike coins, tokens do not have their blockchain. Instead, they operate on other crypto coin blockchains, like Ethereum, which houses BAT, BNT, Tether, and other tokens.

Tokens represent things. A digital token often represents physical or intellectual property, such as a work of art, a piece of art, or even a property. The most famous example of this in the crypto world is NFTs.

Tokens also rely on smart contracts. These are an array of codes that facilitate trades or payments between users. Each blockchain has its smart contract, like ERC-20 (Ethereum) or Nep-5 (NEO).

What’s the difference?

When a token is spent, it moves from one place to another, such as a change in ownership for an NFT. Crypto coins are different because they do not move around. Only account balances change. Transferring money doesn’t go anywhere; the bank changes the balance of both accounts. It’s’ the same with the blockchain.

Another difference between the two is what they represent. As we said, crypto coins are essentially digital versions of money. Tokens can represent assets or deeds for land, cars, works of art, or anything.

In the simplest terms, a token represents what you own (what you’ve’ bought), and a coin represents what you’re capable of holding (what can be purchased with it).

So there you have it. While they are not a million miles away in their differences, there are enough differences that you need to pay attention to which. You’re welcome!

Crypto Coins vs. Tokens; Is There a Difference?

About ARize

Founded in 2018, ARize is an industry leader in the 3D and AR industries. Their mission is changing e-commerce, blockchain technology, and metaverse places by placing power in the hands of the creators. ARize is on a mission to bring 3D and AR capabilities to everyone, supercharging the visual experience it brings.


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