Certified Bitcoin Professional Practice Exam 2025 - Free Bitcoin Certification Practice Questions and Study Guide

The primary difference between a token and a coin is that a coin operates on its own blockchain, while a token does not. In the realm of cryptocurrencies, a "coin" typically refers to a digital currency that has its own native blockchain. For instance, Bitcoin operates on the Bitcoin blockchain, and Ethereum operates on the Ethereum blockchain.

On the other hand, a "token" represents a unit of value issued on an existing blockchain; it typically relies on another coin's underlying infrastructure to function. For example, many tokens are built on the Ethereum blockchain using the ERC-20 standard. These tokens can represent a wide range of assets or utilities, such as rights to a share in a project, access to a service, or even assets in other formats.

This distinction is crucial in understanding the functionality and use cases of various cryptocurrencies in the digital economy. The relationship between tokens and underlying blockchains also highlights how tokens can leverage the security and technology of their parent networks, while coins stand alone as integral parts of their respective systems. Understanding this foundational difference lays the groundwork for further exploration of the cryptocurrency ecosystem.