Cryptocurrency is a rapidly evolving and diverse field. Since the creation of the first digital currency, Bitcoin, there have been thousands of other cryptocurrencies created for specific purposes. While the terms "coins" and "tokens" are often used interchangeably in the crypto world, there is a clear difference between them.
Coins: Also known as base coins or native tokens, these cryptocurrencies are created to serve as the currency of a blockchain. They are used to power the processes on a blockchain network, and can be used as gas, mining incentives, transaction fees, etc. Examples of coins include Bitcoin (BTC), Ether (ETH), NEO, LTC, Monero, DASH, and ADA.
Tokens: Tokens are another type of cryptocurrency that are created on already existing blockchains and serve additional functions besides powering the blockchain. For example, the Ethereum blockchain, which has the largest collection of tokens, functions as a decentralized network that powers other projects through the use of smart contracts. These smart contracts can be used to build applications that run independently on the Ethereum blockchain, and these apps can have their own custom cryptocurrency tokens.
In 2020, the Ethereum blockchain recorded 1.5 million smart contracts with 200,000 different tokens created on its network. Anyone can create their own custom token on blockchains like Ethereum. Some popular tokens include Tether (USDT), Uniswap (UNI), Chainlink (LINK), AAVE, FTX, BUSD, Huobi Token (HT), and DAI.
In conclusion, all cryptocurrencies are either coins or tokens, but not all tokens are coins. Bitcoin is the first coin, while other cryptocurrencies are commonly referred to as Altcoins.
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