Thread by @godgiftalaibi

The misconception about Coins and Tokens in #Crypto

A thread 🧵🧵

#Crypto #web3 #cryptocoins #cryptotokens #Bitcoin #ethereum #solana #BinanceSmartChain #NFT

Many people find it difficult to distinguish between

Coins and Tokens, and as a result, there are many

misconceptions about the two. Some people refer to

Coins as Tokens, while others refer to Tokens as Coins,

and vice versa.

Prior to discussing what coins and tokens are, allow me to give this analogy.

Let’s take a look at a tree. A seed is first planted, which then sprouts roots, forms a plant, and then matures into a tree. The tree will then have roots that serve as its base

a body that produces branches, and finally leaves.

Now let's relate this analogy to coins/tokens.

The blockchain Network can be compared to the roots of a tree (layer 1, layer 2, side chains, etc)

The Tree’s body can be compared to a COIN (bitcoin, Ethereum, BNB, Solana, etc)

A Token can be compared to the branches of a tree(Shiba Inu, floki in, raydium, etc)

Last but not least, the leaves can be compared to the different Utilities seen on both coins and tokens.

The analogy above should have helped you distinguish between a COIN and a TOKEN.

With that said, what is the difference between a COIN and a TOKEN?

Let’s look at each one separately to see what I mean.

WHAT IS A COIN?
A coin is a native asset of a blockchain, and there cannot be two coins on the same blockchain since only one coin can be a native asset.

of a blockchain used to validate and verify transactions, such as bitcoin, Ethereum, Solana, avalanche, and others

A coin is given as compensation for the security of the blockchain network as well as for the verification and validation of transactions i.e Bitcoin and its miners

WHAT IS A TOKEN?

A token is an asset created by Dapps or platforms that are established or running on an existing blockchain network; however, they are not the native asset of that blockchain network.

Developers on a specific blockchain produce a token for its Dapp users.

Some examples are

Protocols for lending and borrowing like Aave on the Ethereum blockchain, solend on the Solana blockchain, venus protocol on the Binance blockchain, etc

Axie Infinity on Ethereum, Star Atlas on Solana, crabada on Avalanche, and other game-related projects

DEXs (AMM) include, among others, Uniswap on the Ethereum blockchain, Pancakeswap on the Binance blockchain, Raydium on the Solana blockchain, etc.

Memes like “Shaba Inu” on the Ethereum blockchain, “Floki Inu” on the Binance blockchain, and “Samo” on the Solana network

NFTs (non-fungible tokens), such as BAYC on the Ethereum blockchain, Degods on the Solana blockchain, Avax Home on the Avalanche blockchain, battle pets on the Binance blockchain, etc.

As you can see from the definition given above, they are not the same.

It’s also worth noting that they have similar use cases, such as

* They can be used for voting as well as governance in
DAOs.

* They can both be used as Dapp fees.

* They are both possible in the same blockchain.

* They can be exchanged for one another.

Finally, a blockchain can have hundreds of tokens built on top of it, but only one native asset (a coin) The underlying coin’s network can provide security and stability to the token’s network.

I believe with this well-articulated post you can differentiate between a coin/token

Thanks for reading. Give this a like and retweet for more reach.
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