Chapter 1- The Basics
Understanding Coins
Coins are digital currencies that run on their own blockchain. Think of them like the main currency of a specific network. For example, Bitcoin (BTC), Ethereum (ETH), and Monero (XMR) each operate on their own blockchains. You can send, receive, or store these coins using wallets made for their specific networks.
Coins are similar to traditional money in a few ways—they’re:
Fungible: Each unit is the same as another (like a $10 bill).
Divisible: You can send small amounts.
Portable: Easy to transfer.
Limited: There’s usually a cap on how many exist.
Most coins are mainly used to pay for things or transfer value. Some, like Ether (ETH), are also used to power apps and smart contracts on their blockchain.
Understanding Tokens
Tokens are digital assets that live on another blockchain. They don’t have their own network—instead, they rely on platforms like Ethereum to exist. Because Ethereum supports smart contracts, it’s a popular choice for creating tokens, especially ERC-20 tokens.
Tokens can be used for many things:
Payments
Voting rights
Accessing features or services within an app
For example, the Basic Attention Token (BAT) is used in digital advertising. Advertisers pay with BAT, and the tokens are shared with publishers and users who engage with the content.
Why Coins and Tokens Matter
Coins help run the core blockchain systems. Tokens, on the other hand, are tools for building useful apps on top of those systems. Together, they make the crypto space more flexible and powerful, helping to support everything from simple payments to complex apps and services.
