Lesson 5 of 21 · 3 min read
Coins and tokens: what crypto is
What a coin is, what a token is, where their prices come from, and what you actually own.
A coin is a network's own money
Every blockchain has its own coin: bitcoin (BTC) on Bitcoin, ether (ETH) on Ethereum, SOL on Solana. The coin is what the network's fees are paid in, and people also hold and trade it.
A token is made on top of a network
A token is created by a program on a blockchain rather than by the blockchain itself. Dollar coins such as USDC are tokens. So are the tokens of apps and projects, and so are wrapped coins, which stand for a coin from another network: cbBTC, for example, stands for bitcoin on Base.
Where the price comes from
A company's shares are tied to its profits. Most coins and tokens have no profits behind them. Their price comes from how many people want to hold or use them compared with how many exist.
That makes their prices move much more than most stocks. Bitcoin, the largest, has lost more than half its value several times and later recovered; many smaller tokens have fallen and never come back.
What you actually own
Owning a coin means the blockchain's record says a certain amount belongs to your address, and only your key can move it. It is not a share of a company and it is not a bank deposit: nothing insures it.
Education only. Nothing here is a recommendation to buy or sell anything.