Cryptocurrency education is important. There’s countless facts the average user will not understand because of the complex terminology or boring content delivery. Today’s crypto fact check will revolve around this question: What’s the difference between a crypto coin and token?
Simply put: Coin vs Token
A crypto coin is a ‘native coin’ to a blockchain.
A crypto token is a cryptocurrency that relies on a foreign blockchain.
Examples of crypto coins would be Binance Smart Chain’s coin is $BNB, Bitcoin blockchain has $BTC, Ethereum has $ETH, Solana Labs has $SOL, and Ripple Labs created their currency $XRP. All of these coins were created by their own parent blockchain. The blockchain control’s the coin.
Tokens are different in the fact that they rely on the blockchain of a foreign company they have no ownership of nor control of.
A few examples of crypto tokens would be Tether ($USDT), SafeHaven ($SHA), Dogecoin ($DOGE), and Shiba Inu ($SHIB). Tether is a token that’s based on many blockchains, at least 14. SafeHaven’s $SHA token is based on the VeChain blockchain. Dogecoin and Shiba Inu are both based on the Ethereum blockchain.
How to know what blockchain a coin or token uses?
A token’s blockchain identifier is identified by your crypto wallet before a transaction.
Examples:
Someone can request “USDT (ERC20)” payments from you which means they want a Tether ($USDT) payment from the Binance Smart Chain.
And keep in mind ‘Tether’ is just the brand name of the crypto-coin $USDT. The abbreviation of the brand with the “$” sign before is just the token symbol.
A second example, if someone requests a “DOGE (erc20)” payment, they want a Dogecoin crypto-coin payment from the Ethereum blockchain.
Can Tokens turn into coins?
Yes, they can. And this process is called a ‘token to coin migration’.
When a crypto-brand becomes successful and has an innovative team, they can develop their own blockchain technology. When this happens they simply do a 1 to 1 token to coin exchange from block to block.
An example of successful migrations are Binance switching BNB from ERC20 (ethereum blockchain) to BEP20 or BSC (binance smart chain). The BNB token was launched in 2017 and was switched to “Binance Chain” in 2019. Today it’s one of the most successful cryptocurrencies in the world.
This process will be possible for as long as digital currencies exist.
