Coin vs TokenERC-20
A coin is the native asset of its own blockchain, such as BTC or ETH; a token is issued by a smart contract on an existing blockchain.
People use 'coin' and 'token' loosely. The useful distinction is where the asset lives: a coin is native to its blockchain, while a token is issued on top of an existing chain by a smart contract.
- Category
- Cryptocurrency and Blockchain
- Reading time
- 3 min
- Also called
- Native coin, Crypto token, Coin and token difference
- Updated
Coins and tokens in plain words
A coin is a blockchain's native asset; for example, bitcoin is Bitcoin protocol's native token.1
Ethereum's native cryptocurrency, ether, is used to pay for all transactions on the network.2
Tokens are created by smart contracts; on Ethereum, those that follow the common standard are called ERC-20 tokens.2 The vocabulary is still evolving, and no single body defines the terms.2
How to tell a coin from a token
Find the home chain
Ask whether the asset is the base asset of its own blockchain.1
Check what pays fees
Native coins like ether pay for transactions.2
Look for a contract
Check how it is issued: a token comes from a smart contract that defines its rules and supply.1
Check the standard
ERC-20 marks a fungible token on Ethereum.2
Fungible or unique
Native coins are meant to be fungible; tokens can be fungible or non-fungible.1
Note the label varies
Sites and regulators may use the words differently.2
Worked examples
Example 1 — Gas in the native coin
0.0012 ETH feeHypothetically you send an ERC-20 token using 60,000 gas at 20 gwei.
| Gas cost in gwei | 60,000 × 20 = 1,200,000 gwei |
| In ETH | 1,200,000 ÷ 1,000,000,000 = 0.0012 ETH |
The fee is paid in ether, the network's native cryptocurrency, not in the token.2
Example 2 — Stuck without the coin
Transfer blockedHypothetically your wallet holds 500 USDC tokens and 0 ETH; a transfer needs 0.001 ETH.
| ETH needed | 0.001 |
| ETH held | 0 |
| Shortfall | 0.001 − 0 = 0.001 ETH |
Without the native coin you cannot pay for the transaction.2
Example 3 — Token supply set by contract
900,000 tokens outside teamHypothetically a contract mints 1,000,000 tokens and gives 10% to a team.
| Team share | 1,000,000 × 0.10 = 100,000 |
| Remaining | 1,000,000 − 100,000 = 900,000 |
Supply is set by the smart contract that defines and issues the token.1
Coin vs token
| Aspect | Coin | Token |
|---|---|---|
| Where it lives | Its own blockchain | On top of another chain |
| Created by | Protocol rules | A smart contract |
| Pays network fees | Yes | Usually no |
| Examples | BTC, ETH | ERC-20 tokens, NFTs |
Why the difference matters to traders
Fees
Keep native coin to pay Trading Fees and Commissions on-chain.
Deposits
Send on the correct network when depositing to an Exchange.
Risk checks
Token contracts add Counterparty Risk from issuers.
Stablecoins
Most Stablecoin issues are tokens on other chains.
Advantages and disadvantages
Advantages
- Clarifies what you actually hold.
- Helps avoid wrong-network deposits.
- Shows where fees come from.
- Highlights contract risk in tokens.
Disadvantages
- Terms are used inconsistently.
- Same ticker can exist on several chains.
- Token contracts can carry hidden controls.
- Legal treatment differs by country.
Going deeper
Read as far as you need. Each level builds on the one before it.
Native vs built on top
Beginner
Bitcoin is the Bitcoin protocol's native token, while ERC-20 tokens are issued by smart contracts on Ethereum.1
Fungible and non-fungible
Intermediate
Non-fungible tokens can stand for one-of-a-kind items, such as an artwork or a property title.2
No single definition
Advanced
There is no sole authority on exact token definitions, and legal and tax classification differs by country.2
Common mistakes
No gas coin
Holding tokens but no native coin for fees.
Wrong network
Sending a token on a chain the receiver doesn't support.
Fake contracts
Buying a token with the right name but wrong contract.
Assuming same rights
Thinking a token gives ownership of a company.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Coins are native to their blockchain.
- Tokens are issued by smart contracts.
- Native coins pay network fees.
- Tokens can be fungible or unique.
- Definitions and legal treatment differ by country.
Frequently asked questions
Is ETH a coin or a token?
Can one token exist on many chains?
Are tokens securities?
Further learning
- Stablecoin
The most-used tokens.
- Trading Fees and Commissions
Why you need the native coin.
- Counterparty Risk
Issuer risk in tokens.
- Market Capitalisation
Valuing coins and tokens.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- NIST. NISTIR 8301: Blockchain Networks: Token Design and Management Overview (opens in a new tab) Checked .
- Board of Governors of the Federal Reserve System. Tokens and accounts in the context of digital currencies (FEDS Notes) (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.