Crypto Coin Vs Token: Fundamental Difference with Example

crypto coin vs token

Welcome to EvenInsight.com. This time we are here with an interesting comparison between Crypto Token and Crypto Coin which are cryptocurrencies.

Often both the terms coins and tokens are used interchangeably but in reality, both have different concepts in the crypto ecosystem. It is crucial to understand the clear difference between tokens and coins to step into the crypto industry and blockchains.

What is Crypto Coin?

The Crypto Coin or a Digital Coin can be defined as the cryptocurrencies designed on an independent blockchain network.

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It is a virtual currency used as a payment method allowing to make cryptocurrency transactions through its own blockchain. Bitcoin is the original coin and is in the market as a unit of value on its own independent ledger.

Crypto coins seem to be similar to physical coins as they simply enable the transfer of payments. The coins have stored value depending on the market demand and supply. Quite often the value of digital coins is said to be volatile.

It is seen that there are numerous coins out in the market. coinmarketcap.com lists around 900 coins with their details.

What is Crypto Token?

Tokens can be defined as cryptocurrencies with no blockchain network of their own.

Here the cryptocurrencies are designed on some other blockchain and allow the users to create their digital tokens through platforms of the DeFi (Decentralized Finance) ecosystem.

Similar to digital coins, crypto tokens also support the transfer of value. One of the major benefits of using tokens is, not only it can be used as a medium of payment but anyone can create tokens to meet specific functionalities.

For example, the Brave browser rewards its users, with a Basic Attention Token (BAT) for browsing the web. Every customer gets paid for viewing advertisements shown in partnership with Brave browser.

Examples of Crypto Coin & Tokens

One of the most popular examples of Crypto Coins is Bitcoin, which works on its native blockchain. In a similar way, Litecoin (LTC) and Ethereum (ETH) work on their own blockchains. Each of these differs in rules, size, performance and miners.

Other examples of Crypto Coins include Ripple (XRP), Dogecoin (DOGE), Cardano, Binance, Tezos and many others.

crypto coins

Ethereum is considered one of the most popular blockchains for Token creation. Ethereum tokens can be easily built on the Ethereum blockchain due to the smart contracts and are known as ERC-20 tokens.

Also, there are NEO, Waves, Lisk, and Stratis tokens which are also called NEP-5 tokens.

Apart from this, there are many more tokens such as Tether (USDT), USD Coin (USDC), UMA, DAI, BAT, Maker, Tron, Chainlink, Aave, Augur, Huobi, and many others that exist in the market.

crypto tokens

These tokens provide much more power than the only transfer of value.

It is easy to create Crypto Tokens, hence the rise of cryptocurrency-based MLM can be seen and Ponzi scheme scams are grown.

Crypto Coin Vs Crypto Token

The major differences between Crypto Coin and Crypto tokens are:

  • Crypto Coins tend to have their own native blockchains whereas the Crypto Tokens are built on already existing blockchains.
  • The Crypto Coins can be used to make payments whereas the tokens can be used for multiple processes.
  • It is more difficult to create Crypto Coin than Tokens, as Crypto Coins needs to build from scratch.
  • Crypto Coins are distributed through mining whereas Crypto Tokens through ICOs (Initial Coin Offerings).
  • The trading with coin can be done with minimal fees whereas working with Tokens need to pay network fees.

Apart from these major differences, there is a huge difference in the use cases of Crypto Coins and the tokenomics of tokens across multiple industries.

Use Cases of Crypto Coin

The crypto coin mainly includes three use cases:

MotiveDetails
Storing value The crypto coins aim to offer alternatives to conventional banking. The decentralized transactions have become a reliable store of value.
Digital cashThe crypto coins serve as digital cash that can be used to make payments or can be transferred against anything. Anonymous payments can be easily made to ensure security.
Real-time international transactionsThe crypto coin is designed to support real-time transactions as they don’t require any clearance or centralized counterparty approval.

Use Cases of Crypto Token

The crypto tokens mainly include 3 use cases as following:

Motive Details
DappsThe Dapps (digital apps) range from games and social media platforms to lending platforms for ease of use.
Smarter contractsSmart contracts help to automate transactions in mutually agreed conditions.
Digital identitiesDifferent governments imply different rules on digital services. The decentralized identity is used to get verified access to digital services.

Which is Better? Coin or Token

Now you must have understood that both coin and token serve different purposes. Each one is better in its own way.

Crypto Coin

The crypto coins tend to offer high flexibility and independence but at the same time are expensive to build and require large businesses to support them.

The best use of a crypto coin is storing it and exchanging it as money.

If the project to be created focuses on cryptocurrency and its main goal is to develop a platform or propose a new financial system, opting for crypto coins is a better choice.

Crypto Tokens

Compared to coins, the tokens are fast, cheap and easy to develop. The tokens don’t require much maintenance but are dependent on the main network reducing the flexibility. Tokens can be opted as the side projects to bring funds to main projects.

Also, tokens can represent the real assets that can be dealt with without moving them physically.

Final Verdict

The investors first need to know that both coins and tokens can only be traded as long as they are listed. The major difference come in the use cases of both currencies.

The coin mainly comes with money utility and one must invest in it, not for the sake of exchanging it later but to use it well.

On contrary, the tokens can be used inside the DApps even when there is no assigned utility to them.

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