In everyday crypto conversation, ‘token’ usually refers to a cryptocurrency that runs on top of another blockchain (like an ERC-20 token built on Ethereum), as distinct from a ‘coin’ like Bitcoin or Ether that has its own independent blockchain. Technically, both are cryptocurrencies — but the distinction matters for understanding how a given asset is built and what it’s designed to do.
Key Takeaways
- A ‘coin’ (like BTC or ETH) typically has its own independent blockchain; a ‘token’ is usually built on top of an existing blockchain, using a standard like Ethereum’s ERC-20.
- Tokens can represent a huge range of things: a currency, a governance right, a claim on an asset, access to a service, or a unique collectible (NFT).
- Building a token on an established blockchain like Ethereum is much faster and cheaper than launching an entirely new blockchain, which is why the vast majority of crypto projects issue tokens rather than coins.
- Because tokens inherit the security of their underlying blockchain, a token’s security is only as strong as the smart contract code that defines it — a separate concern from the base blockchain’s own security.
- The terms ‘coin’ and ‘token’ are often used loosely and interchangeably in casual conversation, so context usually matters more than strict definitions.
Our Take
The coin/token distinction is more useful as a mental shortcut for a project’s technical architecture than as a rigorous classification — in practice, most projects reach for issuing a token on an existing chain rather than building a new blockchain, because it’s dramatically faster to ship and inherits the security and tooling of an established network. That’s exactly why the number of tokens in existence vastly outnumbers the number of independent blockchain ‘coins.’
The more useful due-diligence question, once you know something is a token rather than a coin, is what specific right or function it actually confers — currency, governance, access, ownership claim — since ‘token’ alone tells you almost nothing about the asset’s actual purpose or risk profile. Two ERC-20 tokens can be as different from each other as a company’s stock and a gift card, despite sharing the same underlying technical standard.
FAQs
Is Ether a coin or a token?
Ether (ETH) is generally considered a coin, since it’s the native asset of its own independent blockchain (Ethereum). Assets built on top of Ethereum, like most ERC-20 tokens, are considered tokens.
Why do most crypto projects issue tokens instead of building their own blockchain?
Building and securing a new independent blockchain is expensive and complex. Issuing a token on an established chain like Ethereum is much faster and inherits that chain’s existing security and infrastructure.
📎 Source: Coinbase Learn — What is a token?
