Difference Between Platform Coins and Tokens in the Crypto World - A Detailed Guide

When starting to explore the cryptocurrency market, many investors often confuse concepts such as platform coins, tokens, altcoins… This article will help clarify these concepts to deepen your understanding of blockchain and potential investment opportunities.

What Is a Platform Coin?

Platform coin (or also called Layer 1 coin) refers to cryptocurrencies created through independent blockchain technology. Their main purpose is to provide a means of exchange similar to traditional currency.

Bitcoin is the most representative example of a platform coin, with the core function of buying, selling, and storing value. Besides Bitcoin, other coins include:

• Ethereum (ETH) - Ethereum Blockchain
• Binance Coin (BNB) - Binance Smart Chain Blockchain
• Solana (SOL) - Solana Blockchain
• Dogecoin (DOGE) - Famous Altcoin
• Ripple (XRP) - Altcoin

All coins that are not Bitcoin are categorized as Altcoins (abbreviation for “alternative”), which are alternative cryptocurrencies with different features and purposes.

What Is a Token and How Is It Different from a Coin?

Token (digital asset) is a type of digital currency representing assets or rights on a specific blockchain. To visualize easily, if a platform coin is the “fiat currency” of each blockchain, then a token is a “financial product” serving specific services.

Clear differences between platform coins and tokens:

• Platform coin: Exists independently on Layer 1, serving as the main means of payment of the blockchain
• Token: Operates on existing blockchains (Layer 2, 3), serving specific projects

Although there is a distinction, in daily transactions, investors often do not need to differentiate clearly — the important thing is to understand how they operate in the market.

Common Types of Tokens

Payment Token

Payment tokens function like a medium of exchange, store of value, and unit of account. Examples: Bitcoin, Litecoin — they perform basic payment and settlement functions.

Utility Token

Utility tokens are designed specifically for the ecosystem of a particular project, creating an internal economy within the blockchain. Applications include:

• Purchasing special items
• Receiving discounts
• Staking to earn passive income

Examples: BNB (Binance), UNI (Uniswap), SAND (The Sandbox), MANA (Decentraland)

Governance Token

Governance tokens are a special type of token that allows holders to participate in the governance process of a protocol. They function like voting ballots, enabling the community to vote on important project decisions.

NFT (Non-Fungible Token)

NFTs are unique digital assets that cannot be replaced or duplicated. Ownership is recorded on the blockchain (such as Ethereum).

Examples: CryptoPunks, PhantaBear — famous NFT collections

Better Understanding of Blockchain Ecosystems

Currently, prominent blockchains include:

• Ethereum
• Binance Smart Chain
• Solana
• Luna
• Fantom
• AVAX

Each blockchain is like a “country” in the crypto world, issuing its own platform coin to maintain network operation. On top of that, projects issue tokens for specific purposes.

Conclusion

Understanding platform coins and various tokens is an important step to participate in the cryptocurrency market intelligently. Although they have technical differences, both play vital roles in the blockchain ecosystem. When trading, remember that each token or platform coin has its own purpose — learn about them thoroughly before investing!