In crypto, “coins” and “tokens” are often used interchangeably, but they’re technically different. Understanding the distinction helps you evaluate projects more accurately.
Coins
A coin is the native cryptocurrency of its own blockchain. Bitcoin (BTC) runs on the Bitcoin blockchain. Ether (ETH) runs on Ethereum. Solana (SOL) runs on the Solana blockchain. These are coins — they’re the “fuel” that powers their respective networks. Coins are used to pay transaction fees, reward validators/miners, and serve as the primary store of value on their chain.
Tokens
A token is a cryptocurrency that runs on someone else’s blockchain. USDT runs on Ethereum (and other chains) — it’s a token, not a coin. Uniswap (UNI) runs on Ethereum — it’s a token. Shiba Inu (SHIB) runs on Ethereum — also a token. Tokens are created using smart contracts on existing blockchains. The most common standard is ERC-20 on Ethereum.
Why It Matters
- Fees: When you send an ERC-20 token, you pay gas fees in ETH (the coin), not in the token itself. You always need some of the native coin to transact.
- Security: Tokens inherit the security of their host blockchain. An ERC-20 token is as secure as Ethereum itself.
- Valuation: Coins typically have more “fundamental” value because they’re essential to network operation. Tokens derive value from their specific use case.
- Migration: Tokens can sometimes move to their own blockchain. BNB started as an ERC-20 token on Ethereum before Binance launched its own chain.
Multi-Chain Tokens
Many tokens exist on multiple blockchains simultaneously. USDT exists on Ethereum, Tron, Solana, and many others. When sending USDT, you must make sure the sender and receiver are on the same network — sending USDT on Ethereum to a Tron address will result in lost funds.
Quick Reference
| Example | Type | Blockchain |
|---|---|---|
| BTC | Coin | Bitcoin |
| ETH | Coin | Ethereum |
| SOL | Coin | Solana |
| USDT | Token | Multiple (ETH, Tron, etc.) |
| UNI | Token | Ethereum |
| SHIB | Token | Ethereum |
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