Coins & Tokens

Coin vs Token: What's the Actual Difference?

Coins are native to their own blockchain (BTC, ETH). Tokens are built on existing chains (USDC, UNI). This distinction affects fees, compatibility, and security evaluation.

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#coins#tokens#erc-20#blockchain#explainer

People use "coin" and "token" interchangeably, but they mean different things technically. Understanding the distinction helps you evaluate projects, understand gas fees, and avoid mistakes when transferring crypto.

Coins: Native to Their Own Blockchain

A coin is the native cryptocurrency of its own blockchain. It's used to pay transaction fees and secure the network. The blockchain was built for this coin.

  • BTC is the native coin of the Bitcoin blockchain.
  • ETH is the native coin of the Ethereum blockchain.
  • SOL is the native coin of the Solana blockchain.
  • MATIC/POL is the native coin of the Polygon network.

The defining characteristic: you need the native coin to do anything on that blockchain. Want to send a token on Ethereum? You pay gas in ETH. Want to interact with a Solana dApp? You pay fees in SOL. The coin is the fuel.

Tokens: Built on Someone Else's Blockchain

A token is a cryptocurrency created using a smart contract on an existing blockchain. It doesn't have its own network — it piggybacks on another chain's infrastructure.

  • USDC is a token on Ethereum (and other chains). It uses Ethereum's network but isn't Ethereum itself.
  • UNI (Uniswap) is a token on Ethereum — the governance token for the Uniswap protocol.
  • LINK (Chainlink) is a token on Ethereum — used to pay oracle node operators.
  • SHIB (Shiba Inu) is a token on Ethereum — a memecoin with no native blockchain.
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Most new crypto projects launch as tokens, not coins. Building an entire blockchain is expensive and complex. Deploying a token on Ethereum can be done in an afternoon — which is both a feature (low barrier to innovation) and a risk (low barrier to scams).

Token Standards

Tokens follow standardized rules defined by the blockchain they're on:

Common token standards
Standard  | Chain    | Type          | Examples
──────────|──────────|───────────────|──────────────────────
ERC-20    | Ethereum | Fungible      | USDC, UNI, LINK, SHIB
ERC-721   | Ethereum | NFT (unique)  | Bored Apes, CryptoPunks
ERC-1155  | Ethereum | Multi-token   | Gaming items, mixed collections
SPL       | Solana   | Fungible      | BONK, JUP, RAY
BEP-20    | BNB Chain| Fungible      | CAKE, Various BSC tokens

When you hear "ERC-20 token," that means a fungible (interchangeable) token built on Ethereum following the ERC-20 standard. This standard ensures all Ethereum wallets and exchanges can interact with the token correctly.

Why Does This Matter?

  • Gas fees — when you send a token on Ethereum, you pay gas in ETH (the coin), not in the token. If you have USDC but no ETH, you can't send the USDC. Always keep a small ETH balance for gas.
  • Network compatibility — a USDC token on Ethereum is not the same as USDC on Solana. Same name, same value, different networks. Sending Ethereum USDC to a Solana address doesn't work. See our network guide.
  • Security evaluation — anyone can create a token in minutes. The ease of creation means you need to verify legitimacy. A coin with its own blockchain required significant investment to build. A token required a few lines of code. See our token checklist.
  • Multi-chain tokens — many tokens exist on multiple chains (USDC on Ethereum, Arbitrum, Solana, etc.). The same token on different chains is not directly interchangeable — you need a bridge to move between them.

Quick Reference

Coin vs token summary
                    | Coin              | Token
────────────────────|───────────────────|─────────────────────
Has own blockchain  | Yes               | No (uses existing)
Used for gas fees   | Yes               | No (pay gas in coin)
Examples            | BTC, ETH, SOL     | USDC, UNI, LINK
Creation difficulty | Very hard (years) | Easy (hours-days)
Typical purpose     | Network fuel,     | Governance, utility,
                    | store of value    | stablecoins, memes
Here's the easy way to remember: coins run their own blockchain. Tokens are guests on someone else's blockchain. When you pay the gas to move a token, you pay in the host chain's coin.

Now that you know the difference, explore the different types of tokens and what they do, or learn about the best coins to start with as a beginner.

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