Difference Between Tokens and Coins
In the realm of blockchain technology, the terms "tokens" and "coins" are often used interchangeably, but they represent distinct concepts. Coins are digital currencies that operate on their own blockchain. For example, Bitcoin and Ethereum are considered coins, as they have their own native blockchain networks. Coins are primarily used as a medium of exchange, a store of value, or to facilitate transactions within their respective ecosystems.
Tokens, on the other hand, are digital assets created on existing blockchains, typically through smart contracts. They do not have their own blockchain but leverage the underlying infrastructure of platforms like Ethereum. Tokens can represent various assets or utilities, such as access to a service, voting rights, or ownership of a share in a decentralized application (DApp). They come in various standards, such as ERC-20 for fungible tokens and ERC-721 for non-fungible tokens (NFTs).
In summary, the key difference lies in their structure: coins operate on their own blockchain, while tokens are built on existing blockchains. Understanding this distinction is crucial for anyone looking to navigate the complex landscape of blockchain technology and tokenization.