What is a crypto coin?
A crypto coin is a digital currency that has its own blockchain network. You can use it to pay, transfer money, or hold as an investment. When you send or receive crypto coins, you pay transaction fees directly with that coin.
Each blockchain network has only one official coin. For example:
- Bitcoin (BTC) is a crypto coin of Bitcoin blockchain.
- Ethereum (ETH) is a crypto coin of Ethereum blockchain.
- Solana (SOL) is a crypto coin of Solana blockchain.
You can use crypto coins for different things, like paying for transactions (called "gas fees"), voting in blockchain governance, or staking to earn rewards.
What is a crypto token?
A crypto token is a digital asset created on top of an existing blockchain. Crypto tokens don’t have their own blockchain. They’re created by projects to serve a specific purpose within their own ecosystem.
For example, LINK is a crypto token made by Chainlink on the Ethereum blockchain. You use LINK to pay for Chainlink's services, like pulling reliable real-world data into smart contracts. User who transfer LINK from one wallet to another need to use Eth coin for paying transaction fees.
When a token project grows big enough, the developers might build their own blockchain. At that point, their token becomes a coin. A famous example is Binance Coin (BNB). It started as a token on Ethereum, then launched its own blockchain, BNB Chain, turning BNB into its own coin.
Are crypto tokens and coins the same?
No, crypto tokens and coins are not the same. They might seem similar, but there's a clear difference between the two. Coins have their own blockchain. Tokens do not—they run on other blockchains.
For example, Ethereum (ETH) is a coin because it runs on its own blockchain. But the UNI token from Uniswap runs on Ethereum’s blockchain, making it a token. Token holders can use the UNI token to vote on important decisions that affect the Uniswap protocol, like updating fee structures, deciding on new features, or choosing how the treasury funds should be spent.
What are some examples of popular tokens and their uses?
Crypto tokens have many uses, depending on the project or app. Here are some popular categories and tokens that represent them in 2023–2024:
1. Governance token – UNI (Uniswap)
Governance tokens give crypto investors voting power in crypto projects. If you own UNI tokens from Uniswap, you can vote on changes like fees, upgrades, or new features. Your UNI holdings influence how Uniswap grows and evolves.
2. Utility token for blockchain services: LINK (Chainlink)
Chainlink’s LINK token lets you buy trusted real-world data. You use LINK tokens to connect smart contracts with external information and vice versa, like crypto prices, weather updates, stock prices, or sports results.
3. Stablecoin for trading: USDC
USDC is pegged 1:1 with the U.S. dollar. Traders widely use USDT as a safe place to store crypto funds between trades, helping you avoid price swings common in other crypto assets.
4. Web3 gaming token: AXS (Axie Infinity)
AXS tokens from Axie Infinity let you play and participate in the Axie Infinity game ecosystem. You can earn AXS as a reward by playing games, use it to breed new creatures (Axies), or vote on decisions within the game.
5. Token for exchanging NFTs: APE (ApeCoin)
APE token, from the creators of Bored Ape Yacht Club, is used to buy and trade NFTs (non fungible tokens) in their marketplace. You use APE tokens to purchase unique digital collectibles or gain special access to exclusive NFT drops.
6. Token for decentralized exchanges: UNI (Uniswap)
On decentralized cryptocurrency exchanges like Uniswap, UNI tokens reward users, incentivize liquidity providers, and let holders vote on important changes, like new token listings or fee structures.
Each token has its own clear purpose, making it easier for you to choose the right one based on what you want to do—trade, invest, or play games.
7. Reward tokens in decentralized finance (DeFi) projects: CRV (Curve)
You earn CRV tokens by providing liquidity on Curve Finance. These tokens encourage you to put money into the system, offering returns and letting you vote on key decisions for Curve Finance.
8. Tokens for lending and borrowing: AAVE (Aave)
AAVE tokens give you perks when using Aave’s lending platform. You can use them for staking or voting protocol changes, getting fee discounts, or earning rewards for providing liquidity.
9. Tokens in social media or creator economy: STEEM (Steemit)
On platforms like Steemit, you can earn STEEM tokens when creating engaging content. You use these tokens to reward others, promote your own content, or access special features within the platform.
10. Tokens for privacy and anonymity: ZEC (Zcash)
Zcash tokens (ZEC) let you transfer money with complete privacy. You use ZEC if you want your transactions to stay confidential, helping you keep your crypto activity anonymous.
10. Tokens for payments in crypto ecosystems: CRO (Crypto.com)
CRO tokens let you pay fees at a discount, earn cashback, or get exclusive benefits within the Crypto.com ecosystem. If you hold CRO, you also get lower trading fees and cashback rewards on purchases.
FAQs about crypto coins and tokens
How do I know if I have a token or a coin?
Check if the crypto you hold has its own blockchain—if yes, it’s a coin (like ETH or BTC). If it’s built on another blockchain, it's a token (like UNI on Ethereum). You can easily find this info on crypto tracking sites like CoinGecko or CoinMarketCap. Also, tokens usually need you to have another coin for transaction fees.
Can a crypto token become a coin?
Yes, a token can become a coin if the project later builds its own blockchain. For example, BNB started as a token on Ethereum but became a coin when Binance exchange launched its own blockchain, BNB chain. After the move, the token officially becomes the blockchain's native coin.
Is creating a crypto token illegal?
Creating a crypto token isn’t illegal, but it must follow local laws. Many countries allow you to create and sell tokens, but you have to be careful how you market them. If tokens look like securities (investments), they might face stricter rules.
How do tokens impact crypto projects?
Tokens help crypto projects attract users, raise funds, and reward active participation. They incentivize you to use a product, contribute liquidity, or participate in governance decisions.
