Difference Between Crypto Coins and Crypto Tokens

Crypto culture seems to be expanding in and around the world. In a recent survey, investment firm Alto said that millennials aged between 25-40 years are seeing crypto assets as a viable savings instrument for long-term holdings. While we all have a general idea of what cryptocurrencies are, blockchain-built digital financial assets, they are further classified under two more categories — crypto coins and crypto tokens.

Crypto Coins

Crypto coins are the bigger bricks in the crypto pyramid. They are digital assets that have their own, dedicated blockchains.

Bitcoin, Ethereum, Solana, and Polygon are some known examples of crypto coins.

Crypto coins can be purchased and used the same way as we use money. These have longer shelf lives and can be swapped with other coins churning high market values.

Security wise, crypto coins are encrypted and secured on their blockchain networks keeping information accessibility limited to only the senders and the receivers.

Crypto Tokens

Crypto tokens are born out of already existing blockchain networks, and that is the main factor that distinguishes them from the coins.

Essentially, tokens are the sub-classes of digital assets.

Ether, for instance, is the native cryptocurrency of the Ethereum blockchain.

DAI, LINK, and COMP, on the other hand, are crypto tokens built on the Ethereum network.

While crypto coins can be used as a replacement of money, crypto tokens can be used for multiple purposes ranging from buying goods to being used as gas fees and even to activate features on decentralised applications (dApps).

It is essential to understand the difference between crypto coins and tokens, so that you will be more aware before investing in either of the digital assets.

Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.