Coins vs Tokens: What’s the Difference?
Breaking down one of crypto’s most fundamental concepts
If you’ve ever wondered what makes something like Bitcoin a “coin” and BONK a “token,” you’re not alone.
Even people deep in crypto sometimes mix these up.
Let’s clear it up in the simplest way possible.
Coins: The Original Currencies of Their Own Blockchains
A coin is the native currency of its own blockchain.
It powers that blockchain’s ecosystem by paying for transactions, rewarding validators, and keeping the network secure.
Think of it like the official money of a country.
Canada has the Canadian dollar, the US has the US dollar. Each has its own economy and banking system.
A few examples:
$BTC (Bitcoin): native coin of the Bitcoin blockchain
$ETH (Ether): native coin of the Ethereum blockchain
$SOL (Solana): native coin of the Solana blockchain
Each of these blockchains runs independently, with its coin acting as the “fuel” for that network.
When you send Bitcoin from one wallet to another, it happens directly on the Bitcoin blockchain using $BTC as payment.
No middle layer. No dependency.
Why coins are needed:
Coins are what keep blockchains alive. They:
Pay for transaction fees
Reward miners or validators who secure the network
Help manage governance in some systems (like voting on updates)
Act as a store of value within their own ecosystem
Without the native coin, a blockchain can’t function because there would be no incentive for anyone to run or secure it.
Tokens: Built on Top of Existing Blockchains
A token doesn’t have its own blockchain.
It exists on top of another blockchain and uses that network’s system to operate.
If coins are like national currencies, tokens are like business loyalty points or gift cards that run on top of those national currencies.
They have value, but they rely on the country’s money system to exist.
Examples:
$USDT (Tether): a stablecoin that lives on Ethereum, Tron, and other chains
$LINK (Chainlink): a utility token built on Ethereum
$BONK (Bonk): a memecoin created on the Solana blockchain
These tokens depend on their host network for transactions and security.
For example, when you send $BONK, the transaction fee is paid in $SOL, because it uses Solana’s blockchain to move.
Why tokens are needed:
Tokens make blockchains useful. They:
Represent assets like stablecoins or real-world value
Power applications and games built on existing networks
Reward users for participation in ecosystems
Help communities launch projects without creating a whole new blockchain
Tokens make crypto flexible. They bring variety, creativity, and innovation to existing chains without needing to rebuild from scratch.
Why It Matters
Understanding this difference helps you know:
Which blockchain your crypto actually lives on
What fees you’ll pay when sending it
Whether a project builds its own technology or relies on another network
It also helps you see the bigger picture.
Coins create the infrastructure, while tokens create the apps, communities, and real-world uses that run on top of it.
Final Thoughts
In short:
Coins are native currencies of their own blockchains
Tokens are built on top of those blockchains
You can think of coins as the governments and currencies, and tokens as the businesses and products that operate within those economies.
Both are essential. Coins build the foundation, and tokens bring life to it.
Bonus insight: Coins and tokens aren’t the same as stocks. Owning them doesn’t give you a share of a company. It gives you access to a decentralized network or product instead.
Simple as that.
Not financial advice.