What is a coin? What is a token?
Cryptocurrencies are broadly divided into coins and tokens. Although they often look similar in a wallet, they work differently on a technical level. Understanding the difference helps you manage your assets more effectively in Wraith Wallet.
What is a coin?
A coin is the native currency of its own blockchain. It is issued directly by the network and has an essential role in how that blockchain operates.
Characteristics of coins
Native to a blockchain - e.g. Bitcoin (BTC) belongs to the Bitcoin network, Ether (ETH) belongs to Ethereum, Solana (SOL) belongs to Solana.
Transaction fees - coins are usually required to pay gas or network fees.
Consensus participation - coins are staked or mined to secure the network and reward validators/miners.
Governance - on some blockchains, coins are used to vote on upgrades and proposals.
Examples of coins
BTC - mined via proof-of-work, used as a global store of value.
ETH - used to pay gas fees and stake for proof-of-stake validation.
SOL - used for fees and staking on the Solana blockchain.
What is a token?
A token is created on top of an existing blockchain. It does not have its own chain but instead relies on another blockchain’s infrastructure to operate.
Characteristics of tokens
Issued via smart contracts - e.g. ERC-20 tokens on Ethereum, SPL tokens on Solana.
Wide range of uses - tokens can represent stablecoins, DeFi governance rights, in-game assets, or even real-world items like real estate.
Dependence on a base coin - transactions involving tokens still require the blockchain’s native coin to pay fees (e.g. sending USDT on Ethereum requires ETH for gas).
Examples of tokens
USDT (Tether) - a stablecoin issued on multiple blockchains, pegged to the US dollar.
LINK (Chainlink) - a utility token powering the Chainlink oracle network.
UNI (Uniswap) - a governance token for the Uniswap decentralised exchange.
Key differences between coins and tokens
| Aspect | Coin | Token |
|---|---|---|
| Origin | Native to its own blockchain | Created on an existing blockchain |
| Function | Secures the network, pays fees | Provides utility or governance rights |
| Examples | BTC, ETH, SOL | USDT, LINK, UNI |
| Requirement | Standalone network | Depends on another network’s coin for fees |
Why it matters in Wraith Wallet
Adding assets - when enabling tokens, remember they belong to an underlying network.
Paying fees - always keep a small balance of the native coin (e.g. ETH, SOL, BNB) to cover transaction costs when sending tokens.
Staking - staking is only available for coins, not tokens.
Summary
Coins are native to their own blockchain.
Tokens are built on top of another blockchain.
Both coins and tokens are supported in Wraith Wallet, but tokens always require the base coin to pay fees.
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