What Is a Coin?
A coin is a digital asset that runs on a native blockchain, acts as money, and can be created through mining. Unlike tokens, coins are not designed with utility functions, such as voting rights. Instead, they serve as digital currencies used as a medium of exchange within a digital economic ecosystem.
A coin is defined by three characteristics:
- Operates on its own blockchain — In contrast with tokens, which are built on top of existing blockchains, a coin operates on its own blockchain. For example, Bitcoin (BTC) runs on the Bitcoin blockchain, and Ether (ETH) runs on the Ethereum blockchain.
- A medium of exchange — A coin also is a store of value or a medium of exchange. In other words, it acts as money. This is achieved through the usage of a specific coin to purchase goods and services, or traded for an agreed-upon value according to the market.
- Created through mining — Coins are created through mining, a process that involves verifying and adding new transactions to the blockchain.
For more on the differences between coins and tokens, read Crypto Tokens vs Coins — What’s the Difference?