This is one of the most important concepts in crypto.
Letās explain it clearly and simply š
šµ What is a Coin?
A coin is a cryptocurrency that has its own blockchain.
Thatās why itās called a coin ā it works like digital money on its own network.
ā
Examples of Coins
BTC ā Bitcoin blockchainETH ā Ethereum blockchainBNB ā BNB ChainSOL ā Solana blockchain
š§ What coins are used for
Paying network fees (gas)Sending and receiving valueSecuring the blockchain (mining or staking)
š¢ What is a Token?
A token is a crypto asset that is built on top of an existing blockchain.
š« It does NOT have its own blockchain.
ā
It uses another blockchainās technology.
Thatās why itās called a token, not a coin.
ā
Examples of Tokens (on Ethereum)
UNI (Uniswap)AAVEUSDT (ERC-20)LINK
All of these run on Ethereum, not their own blockchains.
ā Why Are They Called Tokens and Not Coins?
Because tokens:
ā Do not secure the blockchainā Do not pay the main gas feesā
Depend on another blockchain
They are like:
šļø Digital tickets, shares, or rights inside an ecosystem So the word token fits better than coin.
š§± How Tokens Work (Very Simple)
1ļøā£ A blockchain already exists (example: Ethereum)
2ļøā£ Developers create a token using smart contracts
3ļøā£ The token uses:
Ethereumās securityEthereumās networkEthereumās transaction system
Example:
Ethereum blockchainETH = coin (native)UNI / AAVE / USDT = tokens (ERC-20)
š§ Simple Analogy (Very Easy)
š¦ Blockchain = Country
š° Coin = National currency
šļø Token = Ticket / Share / Voucher
Example:
Ethereum = CountryETH = MoneyUNI = Voting token inside Ethereum apps
ā ļø Important Note (Very Important)
Some projects start as tokens and later build their own blockchain.
Examples:
BNB ā started as ERC-20 token ā now has its own chainMATIC ā token on Ethereum ā Polygon blockchain exists
š When a project has its own blockchain, it becomes a coin.
š Final Truth
1) No blockchain = Token
2) Own blockchain = Coin3) Coins power blockchains
4) Tokens power applicationsThatās why we say governance tokens, not governance coins.
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