What is Coin and Token

Beginner

5m March 20, 2023

What is Coin

Coins generally refer to the original, native assets of a blockchain network, such as BTC for the Bitcoin network, ETH for the Ethereum network, and SOL for the Solana network. These Coins often serve as the economic backbone of a blockchain network and are responsible for serving as a rewarding, decentralized means of payment for miners to mine or nodes to maintain the network.

Who are miners? What's their value for a blockchain network? Please refer to the content: What is Mining

What is Token

Tokens generally refer to digital assets (mostly created by smart contracts) that are directly minted and issued on existing blockchains using a standardized format, without creating a new blockchain of their own. The most common standards are ERC-20, BEP-20, SLP, ERC-721, etc.

What is ERC-20? What is ERC-721? Please refer to “What is ERC-20” and “What is NFT”

Unlike Coin's goal to maintain incentives, Token's purpose is mainly to serve DApp decentralized applications as a Utility token, providing different economic functions for DApps. (Of course, it can also be used as a decentralized means of payment.) Common Token such as USDT (issued in several blockchain networks), NFT (Token under ERC-721 standard), etc.

Example for Comparison

ETH is a Coin and WETH is a Token (more specifically, a wrapped token).

ETH, as the native cryptocurrency of Ethereum, is not a Fungible Token under the ERC-20 standard but a Coin, which is held directly through the Account System of the Ether network.

WETH, on the other hand, exists as a Fungible Token in a smart contract. Holding this token means that your account address is recorded in the contract.