Coins v. Tokens

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Oftentimes we use coins and tokens interchangeably to refer to our cryptos. However, there is a slight difference between the two which many would simply neglect for convenience.

Oftentimes we use coins and tokens interchangeably to refer to our cryptos. However, there is a slight difference between the two which many would simply neglect for convenience.

 

Let me explain this difference.

 

Coins refer to any cryptocurrency that has a standalone and independent blockchain. For example, BTC, ETH, ADA, ATOM, ALGO, XRP, XLM, DOT and KAI are coins because they run on their own blockchain, not just simply built on top another blockchain.

 

On the other hand, tokens are derivatives of the primary blockchain. To simply state it, tokens are built on top of another blockchain, specifically smart contract blockchains. For example, LINK, USDT, USDC, CHZ and UNI are tokens that are built on top of Ethereum.

 

Let us proceed on more complicated scenarios.

 

LUNA, OSMO, CRO, BNB, XPRT, DVPN, AKT and IRIS which are built using Cosmos SDK are not tokens since they run on their own standalone and separate blockchain. Cosmos provided a software development kit to make it easier for projects to build their own blockchain patterned after that of Cosmos.

 

While MIR and ANC which are projects built on top of Terra's blockchain are tokens because they do not have a blockchain of their own.

 

I hope these make everything easy to understand.

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