Coin vs. Token
A distinction between a coin, which is the native asset of its own independent blockchain, and a token, which is issued on top of an existing blockchain through a smart contract.
A coin is the native asset of its own independent blockchain, used to pay transaction fees and, on proof-of-work or proof-of-stake networks, to secure the network itself — Bitcoin on the Bitcoin blockchain and ETH on Ethereum are both coins in this sense. A token (see Kaavon's "Token" glossary definition), by contrast, is created and managed through a smart contract deployed on top of an existing blockchain, relying on that underlying chain's coin to pay the gas fees needed to transfer or interact with it.
This distinction explains why there are vastly more tokens than coins in existence: launching a new token requires only deploying a smart contract on an existing chain like Ethereum, while launching a genuinely new coin requires building and securing an entirely independent blockchain network. In casual usage, "coin" and "token" are often used loosely or interchangeably, including sometimes within the names of projects that are technically tokens (such as many "altcoins" that are, strictly speaking, tokens issued on another chain), so the precise technical distinction doesn't always match how the terms are actually used in everyday conversation.
Examples
- Bitcoin is a coin, native to its own independent blockchain, while a governance token for a DeFi protocol built on Ethereum is a token, relying on Ethereum's own ETH to pay gas fees.
- Launching a new token requires only deploying a smart contract on an existing chain, which is far simpler than launching a genuinely new coin on an independent blockchain network.