After completing this lesson, you'll understand:
- The difference between coins and tokens.
- Major cryptocurrency coins vs. tokens.
- Use cases for tokens beyond currency.
- Why you don’t receive physical coins when buying Bitcoin or other crypto.
- The diverse types of tokens.
Welcome to Lesson 4 of "Crypto But Simple: An Introduction to Cryptocurrencies".
Virtual Coins: No Physical Form
Unlike metal coins, crypto coins are entirely digital.
👉 Why blockchain ownership replaces physical possession
- Satoshi Nakamoto’s Bitcoin set the precedent for calling units "coins" or "tokens."
- You can buy fractions of a coin (e.g., €20 worth of Bitcoin).
- Ownership is recorded on the blockchain—no physical counterpart exists.
Coins vs. Tokens: Key Differences
| Feature | Coin | Token |
|------------------|-------------------------------|-------------------------------|
| Blockchain | Native (e.g., Bitcoin, Ethereum) | Built on existing blockchains (e.g., Tether, Shiba Inu) |
| Purpose | Currency/store of value | Diverse (DeFi, governance, loyalty programs) |
Token Use Cases
- DeFi Platforms: Earn interest by lending tokens to liquidity pools.
- Loyalty Programs: Trade tokens for perks (e.g., hotel upgrades).
- Governance: Vote on project decisions.
- NFTs: Unique digital assets (covered in Lesson 5).
⚠️ Tokens aren’t just currency—they power ecosystems.
FAQ
Q1: Can I hold a physical Bitcoin?
No. Ownership is virtual, secured by blockchain records.
Q2: What’s the main difference between coins and tokens?
Coins are native to their blockchains; tokens are built atop others (e.g., Ethereum hosts Chainlink).
Q3: Are all tokens interchangeable?
No. NFTs (non-fungible tokens) are unique—learn more in Lesson 5.
Test Your Knowledge
Which describes a coin?
- Native to its blockchain ✅
Tokens can be used for:
- Governance, DeFi, loyalty programs ✅
👉 Explore token utilities further
Key Takeaways:
- Crypto coins = digital money.
- Tokens = multi-purpose tools (DeFi, NFTs, more).
- Ownership is blockchain-based, not physical.
Complete the quiz on Kriptomat Academy to earn your certification!
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