In the world of cryptocurrency and blockchain, a “coin” refers to a cryptocurrency that operates on its own native blockchain. These include assets like BTC (Bitcoin), ETH (Ethereum), and ADA (Cardano). Each of these cryptocurrencies is integral to the blockchain and is used to pay for transaction fees on the chain. These function as a medium of exchange and a utility for participating in network operations (such as staking or transaction validation).
On the other hand, the term “token” is used to describe digital assets that exist on a blockchain other than their native one. There are two broad categories where a cryptocurrency is typically referred to as a token:
- Non-native cryptocurrencies on other blockchains: When a cryptocurrency is bridged or transferred to another blockchain, it is referred to as a token on that secondary chain. For example, ETH is the native coin on the Ethereum blockchain, but if it is bridged to the Bitcoin blockchain, it becomes a token within that network because the native blockchain for ETH remains Ethereum.
- Multi-chain cryptocurrencies: Certain cryptocurrencies are designed to operate across multiple blockchains, often for enhanced interoperability and liquidity. Examples include USDT (Tether) and USDC (USD Coin), which can exist on various blockchains, such as Ethereum, Binance Smart Chain (BSC), and others. Even though they operate across several blockchains, they are considered tokens because they don’t have their own native blockchain infrastructure.
These days, all cryptocurrencies are referred to as “Tokens,” and the term “Coin” seems to have fallen out of popular usage.
