is a coin the same as a token?

Both a Coin and a Token are cryptocurrencies, and they both do have similarities. But, generally, they can be distinguished by their different use case, purpose, and features.

PAYMENT SERVICE

Both are used to buy, trade or exchange “things”, but a coin is usually more of a general-purpose payment instrument. The use of a Token to buy, trade, or exchange is much more limited to the exact “thing” that the Token was designed for. To some degree, this payment distinction can be somewhat of a fuzzy area without precisely definable rules.

A Token’s method to buy and sell these specific things is defined by the Token’s uniquely dedicated decentralized application and smart contract. Although a coin can also be the payment system of a smart contract, the contract is not always required to buy something with a coin. But a Token, on the other hand, can only exist as a payment system if it is part of a smart contract.

The potential reasons to create a new token are only limited by the creative ways that ownership of anything (physical or digital) can be envisioned and then digitized and traded. Since Tokens have far more specific use cases, there are far more types of Tokens than there are types of general-purpose coins. For example, Tokens can be designed to be the unit of payment for things like credits inside of a digital game, or to buy specific art, or to listen specific music, buy real estate, boats, cars, electricity, video viewing hours, etc.

Coins, on the other hand, can pay for things in brick and mortar stores as well as other general digital services.

BLOCKCHAIN

Both Coins and Tokens use a blockchain, but a coin is the initial “native” cryptocurrency of the blockchain. A Token is based on a coin design and piggybacks onto that coin’s blockchain. A Token may use the coin for specific payment purposes (but a coin never uses a Token for anything).

A new Token is relatively easy to create since it is basically a modified version of the coin but with a very unique purpose and features. A Token does not need unique blockchain miners since it uses the same miners as the existing coin’s blockchain. A Token also rellies on all the existing security measures built into the underlying coin. The Ethereum blockchain (with native currency Ether) hosts the greatest number of special-purpose tokens. For this reason, a Coin can be seen as the parent of Tokens. A coin can exist without Tokens, but Tokens can’t exist without coins.

TOKEN AND COIN EXAMPLES

Examples of Coins are: bitcoin, bitcoin cash, litecoin, ether, NEO, Monero, Dash, and more.

Examples of Tokens are: BAT (for advertising), Status (for messaging), PAY (links cryptocurrency wallets to physical debit cards), Augur (for predictions), Civic (to secure personal identity information), and many 100s more.