What’s the difference – Coins, Tokens and Cryptocurrency?

Understanding Coins

Coins are digital assets that are native to their own blockchain. They are independent and operate on their own network. Bitcoin (BTC), Ethereum (ETH), and Monero (XMR) are examples of coins. These coins exist on their own independent ledgers and can be sent, received, or processed.

Coins share certain characteristics with traditional forms of value exchange: they are fungible, divisible, portable, and limited in supply.

Understanding Tokens

Tokens, on the other hand, are digital assets that operate on an existing blockchain network. They do not have their own blockchain but require another blockchain platform to operate. 

Crypto coins exist on the base layer of a corresponding blockchain, rather than on a decentralised application (dApp) built on top of the blockchain.

Because they are the native cryptocurrency of a blockchain network, many think of these coins as “Layer 1” cryptocurrencies. While several different networks, applications, games or other types of protocols may run on top of these Layer 1 protocols, the Layer 1 chains serve as the foundation upon which other applications, and their associated crypto tokens, are built.

Crypto coins typically bear the same or a similar name as their respective blockchains. For example, the bitcoin cryptocurrency exists on the Bitcoin blockchain and the ether cryptocurrency exists on the Ethereum blockchain.