In the context of cryptocurrencies, the terms “coin” and “token” are often used interchangeably, but there is a subtle difference between the two.
A coin is a digital currency that operates on its own blockchain network. Coins are typically used as a means of payment or as a store of value, and they have their own set of rules and protocols that govern how they can be used.
Examples of coins include Bitcoin (BTC), Ethereum (ETH), and Binance Coin (BNB). These cryptocurrencies have their own blockchain networks that are used to process transactions and store data.
A token, on the other hand, is a digital asset that is created and managed on top of an existing blockchain network, such as Ethereum or Binance Smart Chain. Tokens are created using smart contracts, which are self-executing programs that define the rules and functionality of the token.
Tokens can be used for a wide range of purposes, such as representing assets, utility, or governance. Some examples of tokens include ERC-20 tokens on the Ethereum network, BEP-20 tokens on the Binance Smart Chain, and NFTs (non-fungible tokens) on various blockchain networks.
The key difference between coins and tokens is that coins have their own blockchain network, while tokens are created and managed on top of an existing blockchain network.
Although there are technical differences, many traders use coins and tokens in the same sense. This information may come in handy when researching to invest.
