There is a difference between tokens and coins, despite the fact that some people do use them interchangeably. This article will explain the distinction between tokens and coins in a straightforward manner.
A crypto coin is a crypto asset (the term "crypto asset" refers to all different types of cryptos) that runs on its own blockchain rather than on the blockchain of another crypto asset. The fundamental concept behind a cryptocurrency, also known as a "native token," is that the asset has its own blockchain. The original crypto coin and cryptocurrency, Bitcoin, is the most well-known example of a coin in the blockchain industry. Ethereum, Litecoin, and Monero are additional examples.
A token, on the other hand, operates on a different blockchain.
The ERC20 token, which is any token that makes use of the Ethereum blockchain, is the most well-known example of this. An effective illustration of a well-known (former) ERC20 token is Tron. Following the launch of its mainnet, the Tron network now has a native token of its own (its own Tron blockchain). Tether, Chainlink, and Basic Attention Token are some other well-known tokens.
In conclusion, a coin has its own blockchain, whereas a token does not, which is the basic distinction between the two. Another thing to keep in mind is that tokens have a variety of uses, whereas coins are typically only used for one thing (payments). Utility tokens, as an example, are used to access a good or service as opposed to coins or cryptocurrencies.
For instance, the ecosystem of the Brave web browser makes use of the Basic Attention Token (BAT). Audiences receive BAT for viewing advertisers' advertisements, which they can then use to make donations to publishers or keep for themselves. Audiences pay publishers with BAT.
Other applications for tokens include:
Security tokens are shares of a company that are represented similarly to securities from the previous financial system (OldFi), but with the advantages of blockchain.
Tokens that are backed by physical assets, such as gold or real estate, are known as asset tokens.
Stablecoins are tokens that stand in for currencies that are more reliable than cryptocurrencies like Bitcoin, such as the US Dollar or Euro. Non-fungible tokens (NFTs) are tokens that stand in for things that are special, such as artwork, baseball cards, and in-game items (think "virtual real estate" or special virtual pets).
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