When Bitcoin emerged, it set the standard for coins in the blockchain industry. Check out the explanation below to find out the coin definition and get to know what makes it different from a token.
What Is A Coin?
A coin is a cryptocurrency that is native to the blockchain on which it operates. Some of the most prominent coin examples include Bitcoin, Ethereum, Binance Coin, Dogecoin, and TRON.
What You Need To Know About Coins
While the terms “coin” and “token” are often used interchangeably, they have technical and functional differences that are critical for investors to understand.
In a nutshell, a coin is defined by three main characteristics:
- It operates on its own blockchain
- It is developed to act as money
- It can be mined
The combination of these aspects makes coins stand out from other crypto assets.
In contrast, tokens don’t have their own blockchains – instead, they are built on top of existing ones and oftentimes are not mineable. You are most likely familiar with such token examples as Tether, Shiba Inu, and Maker.
What’s more, tokens can perform a variety of other functions aside from payments. This means that they are often used to grant access to products and services, represent equity shares, serve as collectibles, and beyond.
Coins, on the other hand, are not designed to fulfill utility functions. Their main goal is to be a store of value or medium of exchange within a digital economic network. Thus, coins can be traded for other digital assets or fiat money through crypto exchanges or private transfers (like peer-to-peer and over-the-counter trades).
Remember that the crypto market is very volatile, and so are the coins, which means that their price can fluctuate depending on supply and demand, regulations, media hype, and a variety of other factors.
