Coin vs. Token: This is a topic that can be quite confusing to individuals new to cryptocurrency. These two terms are often used as synonyms, thought by many people to be interchangeable. And that’s not all. There are also security tokens, utility tokens, altcoins and stablecoins.
In the world of crypto, things are developing extremely fast. Thus, some terms might overlap a bit. Anyway, the following paragraphs should help and bring in more clarity.
What Is Cryptocurrency?
Cryptocurrency is probably the broadest term that includes “coins” and “tokens.” It is an internet-based means to carry out transactions. By utilizing blockchain technology, cryptocurrencies can be decentralized, transparent, and immutable. Cryptographic and encryption technologies regulate how many units of cryptocurrency will be available and how transactions will be performed. The transactions are carried out directly peer-to-peer, with no need for any bank, institution, third party or central authority.
The primary example is Bitcoin, which is based on blockchain – a public digital ledger, where the transactions can be checked by anybody. Data is kept collectively and shared between individuals using the blockchain network. Blockchain ensures openness and decreases fraud.
What Are Coins?
A coin is typically a cryptocurrency with its own blockchain. The coins are the digital equivalent of cash; they have the same characteristics as money: they are fungible, divisible, acceptable, portable, resilient and have a limited supply. The coins might be sent, received or mined. The foremost example is Bitcoin with the very first blockchain that was unleashed in 2009.
More examples of coins are: Litecoin (LTC) is a peer-to-peer payment cryptocurrency with faster transaction time than BTC. Monero (XMR) has several privacy-enhancing features that improve upon Bitcoin to be secure, private, and untraceable. Zcash (ZEC) is a privacy coin for absolutely private and anonymous payments. Some more coins: Bitcoin Cash (BCH), Cardano (ADA), NEO (NEO), Stellar (XLM), NEM (XEM), Ripple (XRP). The term “coin” does not necessarily mean a large market capitalisation. Some coins have a relatively big market cap (e.g. BTC, XRP, BCH), some coins lag behind.
Although coins are primarily used as cash for payments, some digital coins (such as Dash) have more functions than simply working as a form of money.