The Crypto Lingo – Are Token And Coin The Same?

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Feeling FOMO that the major tech giants around the world or your neighbor are talking about investing in cryptocurrency?

Or surprised by the wild growth in which the crypto space is flexing?

I get it, I was there too until I became obsessed with learning and understanding cryptocurrency before jumping the wagon and investing.

But the coming of the digital currency era has also brought new slang and synonyms that you need to get used to. One such is Coin and Token.

Coin and Token are used interchangeably by many pseudo crypto geeks, but there lie distinctions.

Read this article to understand the simplest way of Coin VS Token, the cryptocurrency lingo, you should not misinterpret.

 

Summary – 

  • A coin is built on a blockchain of its own. While a token is built on another coin’s blockchain. 
  • Coin gives you the power to buy anything, while token gives you the power to buy specifics.
  • Coin keeps a track of transactions on a blockchain, while transactions of tokens are maintained on blockchains of other networks. 
  • A token’s ‘ownership’ can be obtained, while a coin’s ownership cannot be by the general public. 

Observation and curiosity are the two driving forces to learn any skill. To learn about crypto, I engaged with YouTube channels and open source blogs. With every new word I could find on scrolling a cryptocurrency app, clarity in jargon, sans the confusion is what I needed.

Here is my documentation and easy script for decoding the crypto!

Coin – 

The easiest way to understand a coin is, it is a unit of value based on its ‘own’ blockchain. Blockchain is an infrastructure where the data and build of the coin remains. This data is openly accessible to all.

Just like USD or INR, a coin is very similar to money. You can buy products with coins. Companies like Tesla and Microsoft have begun to accept coins for the sale of their products. In fact, El Salvador is the first country to adopt cryptocurrency as its legal tender. Read more.

Token –

Token on the other hand is purpose-driven. They are dedicated to buying certain products or services. Or, tokens are issued for the holders to transact within the project ecosystem.

Most people call a token a digital coin, and that is incorrect. They are completely different from coins.

Now let’s look into a few key differences.

  • Tokens can be launched by anybody on an existing blockchain. Lunching your own token isn’t hard at all! Ethereum issues standard templates to anyone who can launch their token. Basic Attention token is built on the Ethereum network.

Imagine, not having to build infrastructure, employ coders to deploy hours of in-depth work, and save on all the cloud space! All you need is a step-by-step guide and a template designed by the crypto geeks! There you go, a token on your name!

So, now you know. Tokens do not have a blockchain of their own. They simply get hosted on already existing blockchains.

Tokens like BAT and Tether are hosted on the Ethereum blockchain. This means Tether and BAT do not have a blockchain of their own. All their transactions and data are stored and managed by Ethereum workers on the Ethereum network.

Here’s another key difference between a coin and a token.

  • When a token is bought and sold, it physically moves from, probably one blockchain to the other where it is transferred. Whereas, coin transactions ( happen within the same blockchain), do not physically move. This means, when you buy or sell a coin, it remains in the same blockchain, but the balance of the buyer and seller is adjusted.
  • One needs to keep in mind that accepting a token or not is at the discretion of the blockchain of a coin. Some blockchains do not accept certain tokens.
  • If a token and its technology gets stronger, it can be converted into a coin eventually. The coin gets created before the token holders can swap their holdings and move to become coin holders.

Here is a list of tokens as on beginning of November 2021 from Coinbase

Tokens- Source coinmarketcap
Source Coinmarketcap – StockSandhya

 

 

 

 

 

 

 

 

 

 

 

 The green highlight shows the platform/blockchain on which the token is hosted. 

 Want to learn more about Cryptocurrency lingo? Read 10 Peculiar Terms To Know As A Cryptocurrency Beginner

Also, want to get stared with Cryptocurrency? Here is 5 Ways To Learn About Cryptocurrency As A Beginner

 

 

 

 

 

 

 

 

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