The difference between Tokens and Coins
Most people use 'coin' and 'token' interchangeably, but knowing the real difference can save you from those 'wait, what?' moments (and maybe even some lost gas fees! 😬).
We often just say 'crypto' for everything, right? But deep down, it’s like the difference between cash and a store's gift card. 🛍️
A 'coin' is the actual currency of its own blockchain, like Bitcoin (
$BTC ) or Ethereum (
$ETH ) powering its network.
You use them for transactions on their home blockchain.
But, a 'token' is built on top of an existing blockchain, like a special loyalty point. Think of an ERC-20 token living on Ethereum - it doesn’t have its own blockchain.
Here’s where it gets confusing, but, people often wonder why they need ETH just to send another crypto that isn't ETH!
Therefore, if you’re sending a token (like a DeFi asset) that lives on the Ethereum blockchain, you’ll always need some ETH.
Why? Because ETH is the coin that pays all the transaction costs - the 'gas' - on that network.
The big takeaway is: coins are the foundational money for their own house, and tokens are special assets living inside someone else’s house.
So, when you hear 'ETH gas fees,' you now know exactly why it’s needed! You're basically a blockchain architect now! 🤯
#CryptoBasics #HowItWorks #CoinsVsTokens - Disclaimer: Sharing knowledge and insights as part of learning and growing together. For educational purposes only, not financial advice.