There is a lot of confusing terminology surrounding the cryptocurrency space. Some of them are also found in traditional finance, so having a background in economics means you probably know the meaning of shorting, margin trading, and liquidity. On the other hand, terms that are unique to this industry can be even more confusing (like hashing, hard forks or HODL), especially if you’re only starting out. One of them is the distinction between coins and tokens. When you’re researching the internet for cryptocurrency-related articles and stories, you may find that many authors use those two terms interchangeably. However, there are some key differences. One of them is that a coin exists and functions on its native blockchain. For example, Bitcoin, Ethereum, Monero, etc. - all of them have their own native blockchain that they run on. Tokens, on the other hand, are created on existing blockchains, like the Ethereum, NEO or Waves blockchain.
Those built on Ethereum are called ERC20 tokens. While coins can often be used for paying all over the internet (as long as the seller accepts cryptocurrencies), tokens are created only for use within their own platform or dapp. Compare it to real-world tokens that are available at a theme park: you can use a currency, like the US Dollar or the Euro, to buy these tokens, but also to buy anything else, like entrance tickets or snacks. But the tokens themselves are only usable within the theme park, for example for rides or games. They function as currency only within their platform and under specific, platform-dependent rules. Even inside the theme park, you are most likely unable to buy food using tokens.
