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What is a Coin? What is a Token?

What is a Coin?​

The term "Coin" in cryptocurrency refers to the currency that is native to its own blockchain. They are used as a medium of exchange or a store of value.

Coins have the following characteristics:​

  • They are mined, in proof-of-work blockchains, like Bitcoin or Dogecoin. The newly generated coins are then given out to the miners.
  • In proof-of-stake networks, like Ethereum or Solana, they are staked to validate transactions in the network. The validators get block rewards in the form of new coins.
  • Generally used as fees for submitting transactions on their respective blockchains.
  • Proof-of-stake networks also use them for maintaining network operations, making governance decisions, or voting on protocol changes.

Bitcoin on Gem Wallet Ethereum on Gem Wallet

What is a Token?​

Tokens resides on top of existing blockchains. They represent a variety of assets or utilities, and are often created and distributed via tokens sales or Initial Coin Offerings (ICOs).

Tokens have the following characteristics:​

  • They use the existing infrastructure of another blockchain, like Ethereum, which supports the creation and transfer of tokens through its ERC-20 token standard.
  • They can represent a wide range of assets, from physical objects like real estate or gold to digital assets like virtual land and game assets.
  • They are usually given a specific utility that can be used as a means of creating a digital economy, DeFi rewards, or facilitating transactions within ecosystems.

Some examples are:

  • Tether (USDT), a stablecoin pegged to the US Dollar.
  • Chainlink (LINK), an Ethereum-based token that powers the Chainlink decentralized Oracle network.
  • Uniswap (UNI), the governance token of Uniswap which is a decentralized exchange.

ERC20 Token on Gem Wallet BEP20 Tokens on Gem Wallet