Native coin vs Token: Differences

All cryptocurrencies were primarily native coins with their blockchain and network, like Bitcoin and Litecoin. But with EVM and Ethereum smart contracts development, crypto enthusiasts can produce their coins based on EVM. Such coins are commonly referred to as tokens. 

Both a native coin and all produced tokens can use the same addresses. For example, you can send an Ethereum (ETH) and a Shiba Inu (SHIB) within the Ethereum network to the same address, and they will not interfere with each other in any way.


What is a native coin?

Native coins are the native cryptocurrencies for a specific blockchain. For example, Ether (ETH) is the native coin of the Ethereum blockchain.  

What is a token?

Tokens are created using smart contracts on an existing blockchain. A native coin and a new token of the same blockchain can share the same address.


Tokens are usually created for some new capacities the native coins lack. For example, the exchange value of some tokens is pegged through a special procedure to fiat currencies, like USD. Those tokens are called stablecoins. Some tokens provide registrations of domain names. Other different tokens complete other functions. Almost all tokens can be bought and sold on cryptocurrency exchanges. 

The difference between a native coin and a token

The main difference between a native coin and a token of the same network is clear: all transaction fees within the network are charged in native coins. It means that if you want to send tokens, you need to have enough native coins to pay the transaction fees; otherwise, the miners or validators will not process the transaction.

Custodial wallets run by exchange platforms approve such transactions without available native coins. In this case, the platform provides coins to pay the fees from its liquidity pool, charging you extra tokens.

To put it simply: don't forget to top-up blockchain native coins for sending blockchain tokens on a non-custodial wallet, as transaction fees can only be charged in native coins.