A digital asset created on an existing blockchain (like ERC-20 tokens on Ethereum), as opposed to a native coin.
A token is a digital asset created on top of an existing blockchain using a standard like ERC-20 (Ethereum), BEP-20 (BNB Chain), or SPL (Solana). Tokens differ from coins (which are native to their own blockchain — BTC on Bitcoin, ETH on Ethereum) in that tokens ride on someone else's blockchain infrastructure. Tokens serve many purposes: governance (UNI grants voting rights over Uniswap protocol), utility (LINK pays for Chainlink oracle services), security (tokenized stocks or bonds), stablecoins (USDC maintains dollar peg), and meme (PEPE for community and speculation). Creating a token is relatively easy — a basic ERC-20 token can be deployed with minimal code — which is why thousands of new tokens launch daily. Token quality varies enormously: from multi-billion-dollar DeFi governance tokens to zero-value scam tokens. Evaluating tokenomics (supply schedule, distribution, utility, value accrual) is crucial for assessing any token.
A token is a digital asset created on an existing blockchain rather than having its own native chain — ETH is a cryptocurrency (native to Ethereum), while USDC, LINK, and UNI are tokens (built on Ethereum using the ERC-20 standard). Tokens serve diverse purposes: utility tokens provide access to a protocol's features, governance tokens grant voting rights over protocol decisions, security tokens represent ownership of real-world assets, and stablecoins maintain a fixed value peg. Creating a token is remarkably easy — deploying a basic ERC-20 contract on Ethereum costs under $100 in gas, which is why tens of thousands of tokens exist. This low barrier to entry is a double-edged sword: it enables innovation and permissionless creation but also facilitates scams and low-effort meme coins. Token valuation depends heavily on the underlying protocol's utility, the token's economic design (supply, distribution, utility), and market sentiment.
Chainlink (LINK) is an ERC-20 token on Ethereum — it doesn't have its own blockchain but is used to pay for oracle services and stake in the Chainlink network, giving it utility-driven demand.
Coins (BTC, ETH, SOL) are native to their own blockchain and typically used for gas fees and network security. Tokens (USDC, LINK, UNI) are created on existing blockchains using standard contracts (ERC-20 on Ethereum). The distinction is technical — in casual conversation, 'coin' and 'token' are often used interchangeably.