KoinlyticsPeople use 'coin' and 'token' interchangeably. They are not the same. A coin has its own blockchain. A token is a smart contract that lives on someone else's blockchain and uses the underlying chain's security and infrastructure.
Coin vs token
- Bitcoin (BTC) — a coin. Bitcoin blockchain.
- Ether (ETH) — a coin. Ethereum blockchain.
- Solana (SOL) — a coin. Solana blockchain.
- USDC, UNI, AAVE, LINK — tokens. All live on Ethereum (and often on many other chains too).
The distinction matters because launching a token costs almost nothing and requires almost no infrastructure. Launching a chain costs millions and takes years. Anyone can create a token in an afternoon. That is both a feature and a warning.
The main token standards
ERC-20 (Ethereum)
The most common fungible token standard. Every ERC-20 has the same interface: transfer, balance, approve. That is why any wallet can hold any ERC-20 and any DEX can trade it. USDC, UNI, LINK, and 99% of Ethereum-based tokens follow this spec.
SPL (Solana)
Solana's equivalent. Same idea, different implementation. All Solana tokens (USDC on Solana, JUP, WIF, etc.) use SPL. Wallets like Phantom show them all in a unified list.
ERC-721 (NFTs)
Non-fungible: each token is unique. Used for art, domain names, tickets. See the NFTs chapter.
ERC-1155 (multi-token)
One contract can hold both fungible and non-fungible tokens. Common in gaming, where you might have '10 gold coins' (fungible) and 'one sword of the ancients' (NFT) in the same inventory contract.
Why anyone can make a token, and why that is dangerous
Deploying an ERC-20 costs about 50 lines of copy-paste Solidity and $30 in gas. That means:
- Every legitimate project (DeFi protocol, stablecoin issuer) launches a token.
- Every scam project launches a token.
- The token name is meaningless. Anyone can call their token 'Bitcoin' or 'Ethereum'.
- What matters is the contract address.
How to verify a token is legit
What to remember
A token is just code on someone else's chain. What makes a token valuable is what its contract lets you do (governance vote, collect fees, redeem for something) — not the ticker or the marketing.