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What is the difference between a cryptocurrency token and a cryptocurrency coin? How often do people ask me this question? In order to keep things simple, I’m going to do my best to make it as clear as possible.

What is a Crypto Coin?

To keep track of all the information, store value, and validate transactions, it uses its own blockchain network. Mining is a method used to create Crypto Coins.

Crypto Coins Examples:

• Bitcoin
• Ethereum
• Solana

What is a Crypto Token?

It’s a digital asset that requires someone else’s blockchain network as a platform to exist and operate.

Examples:

• APE – uses Ethereum Blockchain
• TALENTS – uses Solana Blockchain
• TETHER – uses Ethereum Blockchain

Tokens are created through a process called Minting.
Tokens from Ethereum blockchain are called ERC-20 while tokens from Solana blockchain are called SPL tokens.

Benefits of Crypto Tokens

Cost effective – no need to create your own blockchain network.
Ease of use – You just “rent” an existing blockchain and run on it.
Safety and Stability – obtained from an existing blockchain platform.
Variety of use cases – tokens can be used in many ways rather than just transactions.

The focus of a team behind a Crypto Coin is to maintain, develop, grow and improve their blockchain and its use cases.
The focus of a team behind a Token is to develop and to provide a great product.

If a token project is growing quick enough, the developers can migrate from a Token to a Coin.

For instance:

Crypto.com started with an ERC-20 token called CRO.
Later on, they develop their own blockchain platform called Cronos Chain where they have a new version of CRO as a coin. Users with the original ERC-20 token CRO, were able to migrate to the new CRO coin.

Interesting thing to know is that some Coins working in other blockchains are represented as Tokens. How?

If you buy Ethereum in the Solana Blockchain, you are not buying straight Ethereum , instead you are buying a token representation of Ethereum in the Solana Blockchain called “Wrapped-Ethereum”. This token’s value is pegged to the Ethereum value.
You can cash out your Wrapped-Ethereum anytime.
If you send it to an Ethereum based exchange, the Wrapped-Ethereum will be first swapped to straight Ethereum, and then “moved out” from the Solana Blockchain.

Is there any advantage to this? Yes!

A regular Ethereum transaction has an average Gas fee of $20. However, a transaction in the Solana Blockchain is only $0.00025. In theory, you can purchase more Ethereum in the Solana Blockchain since you are saving on transaction costs.

This is why a Solana based crypto exchange called FTX has the lowest fees.

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