Back to: Blockchain Basics
A coin powers its own chain (BTC, ETH, SOL) — it pays for security and fees. A token lives on someone else’s chain as a smart contract (USDT on Ethereum, UNI, game items). Standards like ERC-20 make tokens interoperable: build once, work in every wallet and exchange.
The token zoo
– Payment coins (BTC, LTC): money-first, simplest thesis. – Platform coins (ETH, SOL): fuel for computation; demand tracks usage. – Stablecoins (USDC, DAI): pegged dollars; differ by backing (see the DeFi 101 path). – Governance tokens (UNI, ARB): votes with a price tag — and whale-concentration caveats. – NFTs (ERC-721): unique items, not interchangeable money. – Wrapped assets (WBTC): IOUs for cross-chain use, custodian risk included.
Reading any token in 60 seconds
1. Coin or token? Which chain secures it? 2. Max supply vs circulating vs unlock schedule (vesting)? 3. What is it *for* — fee fuel, votes, access, or pure speculation? 4. Who holds the big wallets (explorers don’t lie)?
Why standards matter more than tokens
ERC-20 did for assets what the web’s HTTP did for pages: one interface, infinite compatible tools. New standards (NFTs, soulbound, tokenized real-world assets) follow the same playbook — the standard, not any single token, is the durable innovation.
Tokens are easy to create and hard to value. The standard tells you the
> mechanics; the distribution tells you the truth.
Next lesson: reading the chain — explorers and data.