ERC-20 Token：not just “Air”
First, Let's clarify a basic question: what is the difference between Coin and Token?
In simple terms, Coin is the native currency of blockchain network, such as Bitcoin and Ether running the independent blockchain of itself.
In contrast, Token is created through a smart contract. for instance，any Token issued on Ethereum, those must live on Ethereum network.
What is ERC-20
Now，let's talk about ERC-20. you may have heard of this term. This is about standard token format on Ethereum and is a standard protocol. It defines a set of rules that make all tokens on Ethereum interoperable, which makes transactions and management easier.
Fungibility
The most important feature of ERC-20 is fungibility.
Fungibility means that if I have an ERC-20 token and it is the same as yours. We can interchange them and they are indistinguishable. It's like fiat currency —— the only difference is the serial number. ERC-20 tokens aren't just for hype; they have many practical effects:
- Crowdfunding: projects can issue tokens and users purchase them to invest.
- Stable coin: such as USDC 、USDT
- Community governance： In DAO, Tokens represent voting rights, which allow holders to participate in governance.
- Payments in DApps: Some DApps use Token to pay fees or unlock app feature.
Summary
In short, Coin is the native currency of its own blockchain, while Token is an asset created on an existing blockchain via smart contracts.
Coin – Key Features
- Runs on its own blockchain
- Used to pay network fees (Gas)
- Serves as the base currency for the ecosystem
Token – Key Features
- Issued on top of an existing blockchain
- Created and managed via smart contracts
- Can represent currency, governance rights, or other assets
ERC-20 is the most widely used token standard on Ethereum, ensuring that all tokens follow the same rules and can interact seamlessly across wallets, exchanges, and DApps.
Top comments (1)
The difference between coins and tokens is something many people get confused about, and your explanation makes it super easy to understand. Great intro to ERC-20 and its real-world uses...