Coins are the term used to describe digital currencies that run on their own native blockchains. They can be considered as the ‘digital’ form of money where you can use them to purchase goods and services or exchange with other cryptocurrencies. Bitcoin and Ethereum can be categorized as Coins as well.
Tokens are generally used to describe smaller projects who do not have their own blockchain and rely on other coins’ blockchain to keep track and transact data. Tokens can be further divided into two categories as followings:
2.1 Utility Token
Utility tokens can be compared to tickets or passes to access and utilize platforms. They are mainly created to provide certain functionality in ecosystems like gasoline for powering an engine. Utility tokens could also take the form of dividends or compensation, such as BAT tokens that are granted to the users of Brave Browser as a share of revenue if they decide to watch the ads while surfing the internet.
2.2 Security Token
The security tokens can be compared to shares of companies or businesses. Holders are seen as investors of the projects, therefore, are eligible to receive any yield or dividends which could be paid in coins, fiat, or utility tokens. Security tokens also enable the tokenization of any assets such as real estate, celebrities, intellectual property, sports teams, etc. where holders are entitled to the ownership corresponding to the amount of tokens they process.