Coin vs Token: Coins, Tokens, Altcoins and ICOs Explained

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Last updated: 16 October 2026 · By Spencer Li, CFTe

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A coin is the native currency of its own blockchain. Bitcoin is the coin of the Bitcoin network, and ether is the coin of Ethereum. A token is built on top of someone else’s blockchain, using that chain’s rules, so thousands of tokens can live on Ethereum without running a network of their own. An altcoin is simply any cryptocurrency other than bitcoin. And an ICO, an initial coin offering, is a fundraising sale where a project sells new tokens to the public.

Those 4 words get used loosely, even by people who should know better. In this post, I’m going to pin each one down with a source, show you where the lines blur, and give you 3 questions that sort out any crypto asset you come across.

What is the difference between a coin and a token?

The cleanest test is where it lives.

A coin has its own blockchain. The network’s miners or validators are paid in it, and every transaction on that network pays its fee in it. Without the coin, the chain does not run.

A token does not need its own chain. It is a piece of software, a smart contract, sitting on an existing blockchain. On Ethereum, most of these follow a shared template called ERC-20. Ethereum’s own documentation says ERC-20 “introduces a standard for Fungible Tokens”, where each token is “exactly the same (in type and value) as another Token.”

The same page lists what tokens can stand for. In its words, “Tokens can represent virtually anything in Ethereum.” Its examples include “reputation points in an online platform”, “skills of a character in a game” and “financial assets like a share in a company”. It also lists “a fiat currency like USD” and “an ounce of gold”.

So when someone says they bought a token, you still know very little. You need to know what the token stands for.

What does each word actually mean?

Here is the whole vocabulary on one page:

The examples show the type only, and none of them is a suggestion. If you want more on 2 of these, what is a stablecoin and what is an NFT go deeper.

If you want a daily routine for trading markets you can actually analyse, the free 15-Minute Swing Trader’s Checklist is at the end of this post.

Why do people mix up coins and tokens?

Mostly because the word “coin” is used for everything. Exchanges list coins and tokens side by side, with the same price chart and the same buy button. Plenty of tokens even have “coin” in their names.

There is a second reason. Some projects start as a token on Ethereum, then launch their own blockchain later and swap holders over to a native coin. The same asset can be a token one year and a coin the next.

So the label matters less than the 3 facts underneath it. Which brings me to the test I use.

How do you work out what you are holding?

I call this the 3-question token check. Run it on anything before you buy it:

1. Whose chain is it on?

If it runs its own network, it is a coin, and its value is tied to whether that network keeps being used and secured. If it sits on another chain, it is a token, and it depends on both that chain and the smart contract that created it. A bug in the contract can hurt a token even when the chain underneath is fine.

2. What right does it give you?

This is the question most buyers skip. A token might give you a vote, access to a service, a claim on some income, or nothing at all beyond the token itself. Read what the project says it does, in writing, and notice if the answer is vague.

3. Who sold it, and to whom?

Find out who created the token, how many exist, and how many the founders kept. If insiders hold a large share, they can sell into any rise in price. That is a risk you take on the day you buy, whether you know it or not.

[INFOGRAPHIC: the 3-question token check as a card, whose chain is it on, what right does it give you, who sold it and to whom, with coin and token answers side by side]

What is an ICO, and how does MAS treat one?

An ICO is how many crypto projects raised money, especially in 2017. The project sold new tokens directly to the public, usually in exchange for bitcoin or ether, often before the product existed.

MAS stepped in that year. On 1 August 2017, it said “the offer or issue of digital tokens in Singapore will be regulated by MAS if the digital tokens constitute products regulated under the Securities and Futures Act”. It noted that its statement came “in the wake of a recent increase in the number of initial coin (or token) offerings (ICOs) in Singapore”.

The same release gave a definition worth keeping: “A digital token is a cryptographically-secured representation of a token-holder’s rights to receive a benefit or to perform specified functions.” Then it drew the line. If a token represents ownership in an issuer’s assets, it “may therefore be considered an offer of shares or units in a collective investment scheme”. Where a token counts as a security, it said “issuers of such tokens would be required to lodge and register a prospectus with MAS prior to the offer of such tokens, unless exempted.”

So the regulator’s test is close to question 2 above. It looks at what right the token carries. A token that works like a share gets treated like one, whatever the project calls it.

Are altcoins riskier than bitcoin?

There is no single answer, because “altcoin” covers thousands of assets. Some are large networks, and some are a website and little else. What can be said is that every extra layer adds a way to fail. A token depends on its chain, its contract and its team. A new coin depends on whether anyone keeps securing its network.

MAS has been plain about crypto as a whole. In a 2022 reply in Parliament, it said cryptocurrencies “are purely speculative as an investment asset, and have no intrinsic value.” Supporters of crypto would dispute that. But it tells you how Singapore’s regulator sees the asset class you are buying into, and that view shapes the rules you trade under.

So what should you remember?

Personally, I think the coin-versus-token label is the least useful fact about any crypto asset. What it does, who controls it, and who already owns most of it tell you far more. The words are worth knowing so you can read a project’s documents. The 3 questions are what protect your money.

For the bigger picture, the blockchain and cryptocurrencies guide maps the whole topic, and the function of a cryptocurrency coin looks at what a coin is meant to do.

So the next time a new token is trending, whose chain is it on? What right does it actually give you? And how much of it do the founders still hold?

FAQ

What is the difference between a coin and a token in crypto?

It comes down to where each one lives. Coins run on their own blockchain, while tokens are created by a smart contract on someone else’s, such as an ERC-20 token on Ethereum.

Is ether a coin or a token?

Ether is a coin. It is the native currency of the Ethereum network, used to pay transaction fees there.

What is an altcoin?

Any cryptocurrency other than bitcoin. People often use the word for tokens too, even though tokens do not have their own blockchain.

Are ICOs legal in Singapore?

MAS said in 2017 that a token offer is regulated if the token counts as a product under the Securities and Futures Act, which can mean a prospectus and licensing. Check the current rules with MAS before taking part in any token sale.

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About the author. Spencer Li is the founder of Synapse Trading and a Certified Financial Technician (CFTe). His trade log is public: every trade since April 2024, dated, losses left in.

Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.

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