Coins vs tokens: what’s the difference?

The terms “coin” and “token” are often used interchangeably, but there are a few key differences to be aware of.

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Key takeaways

  • Understand coins operate on their own blockchain while tokens are hosted on existing networks.
  • Coins function as digital money but tokens represent diverse assets and utilities.
  • Compare over 30 crypto exchanges and many buying guides to begin your crypto journey.
If you're new to the world of cryptocurrency, you'll no doubt have found that there's a whole lot of jargon and technical terminology to try and wrap your head around. Two terms that can be the source of much confusion are "coin" and "token", especially as they're often used to refer to the same things.

But technically speaking, there is one key differentiation between the two.

What is the main difference between crypto coins and tokens?

The one key difference between coins and tokens is that coins are the native currency of a particular crypto blockchain or network, while tokens are additional coins that are hosted on another blockchain.

For example, ETH is the native coin of the Ethereum network, while SHIB (Shiba Inu) is a token that was created on the Ethereum network.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade.

What is a crypto coin?

In general terms, a cryptocurrency coin is just that – an encrypted digital currency meant to be used as a form of payment. A coin is a unit of value that operates on its own blockchain, independently of any other platform. It can be used to store value and pay for services, in much the same way that you would use physical money.

Bitcoin (BTC) is easily the best-known cryptocurrency coin around the world, but it’s far from the only coin available. In fact, there are thousands of crypto coins in existence. You may see many of these other coins referred to as altcoins, an abbreviation of alternative coins, simply because they offer an alternative to Bitcoin.

Some altcoins are a fork of Bitcoin and were developed using Bitcoin’s open-source protocol. Examples include Litecoin (LTC) and Dogecoin (DOGE).

However, there’s also a long list of other altcoins that haven’t been derived from the Bitcoin protocol and have instead created their own blockchain and protocol. Some well-known examples include Ethereum (ETH), Ripple (XRP) and Cardano (ADA).

What is a crypto token?

Tokens are used to represent digital assets that are fungible and tradeable, including everything from commodities to voting rights. However, rather than operating on their own blockchain, tokens are hosted by another platform, such as Ethereum.

While tokens are also a medium of exchange, they offer functionality above and beyond that of coins. Tokens give their holders the ability to take part in some kind of activity – for example, if you want to bet on the outcome of future events through decentralised prediction market Augur, you’ll need to use REP, the Augur platform’s native cryptocurrency token. Tokens can also offer value to buyers, for example through buybacks.

Tokens are usually created in a token generation event and then distributed through public or private sales, airdrops or exchange listings. During the 2017–18 crypto boom, many were sold to the public through Initial Coin Offerings (ICOs), a form of crowdfunding. Some of the best-known crypto tokens include the stablecoins Tether (USDT) and USD Coin (USDC), as well as Chainlink (LINK), Uniswap (UNI) and Shiba Inu (SHIB). All of these are issued on Ethereum, the most popular platform for token development, though USDT and USDC also run on other blockchains such as Solana.

However, there are also plenty of other platforms which tokens can be built upon, including BNB Chain, Solana and Tron.

Must read: Coins vs tokens

Coins are standalone cryptocurrencies based on their own blockchain. Tokens are built and hosted on existing blockchains.

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Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.
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Tim Falk is a writer for Finder, writing across a diverse range of topics. Over the course of his 20-year writing career, Tim has reported on everything from travel and personal finance to pets and TV soap operas. When he’s not staring at his computer, you can usually find him exploring the great outdoors. See full bio

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