Coins and tokens are both forms of digital assets, but they differ in their underlying structure and purpose. Here's a breakdown of the key distinctions between them:

Understanding Coins

Coins are digital assets that operate on their own independent blockchain. They have their own network, ledger, and transaction history, which sets them apart from tokens that rely on another blockchain's infrastructure. Examples of coins include Bitcoin (BTC), Ethereum (ETH), and Monero (XMR).

Coins share several characteristics with traditional currencies:

• Fungibility: Each coin is identical in value to another of the same type.
• Divisibility: Coins can be divided into smaller units for ease of transaction.
• Portability: They can be transferred between users easily.
• Limited Supply: Many coins have a finite supply, increasing their value over time.

Coins are primarily used as a medium of exchange, similar to how traditional currencies function. However, some coins, such as Ether (ETH), also serve other purposes within their respective ecosystems. For example, Ether is used to pay transaction fees and facilitate smart contracts on the Ethereum network.

Understanding Tokens

Tokens are digital assets that operate on an existing blockchain, rather than having their own independent network. They are built on platforms like Ethereum, using its smart contract capabilities. Tokens created on Ethereum, for instance, are often referred to as ERC-20 tokens.

Unlike coins, tokens tend to offer a broader range of functionalities within specific projects:

• Utility: Tokens can grant access to services within a project’s ecosystem.
• Governance: Some tokens enable holders to participate in decision-making processes, such as voting on protocol changes.
• Payments: Though tokens can be used for transactions, their primary purpose is often beyond just acting as a medium of exchange.

An example of a token is TEL, the native utility token of the Telcoin Platform. TEL serves as the platform's medium of exchange and is used for various productive and consumptive purposes across different layers of the ecosystem.

Summary

• Coins: Operate on their own blockchain and are primarily used as a medium of exchange, like Bitcoin and Ether.
• Tokens: Operate on an existing blockchain (like Ethereum) and typically serve more specific purposes within a project’s ecosystem, such as access to services or governance rights.

In essence, coins function more like traditional currencies, while tokens have broader applications that extend beyond just payments, enabling users to interact with specific projects or ecosystems.