Coin vs Token: What Separates Them on a Blockchain

A coin is the native asset of its own blockchain: the protocol creates it, and it pays that chain's transaction fees. A token is an asset issued by a smart contract or program running on a blockchain that already exists. On Ethereum and Solana, moving a token is paid for in the host chain's coin. People use both words loosely, so a technical test works better than the label on an exchange listing: does the asset need a host chain?

Key takeaways

Bitcoin's block reward is newly issued satoshis plus transaction fees, and ETH pays gas and is staked to secure Ethereum. An ERC-20 token, by contrast, is a balance kept by a contract on a chain that has its own coin.
Sending an ERC-20 token still costs gas in ETH. In the illustrative example below, ten token sends need about 0.005 ETH at an assumed 10 gwei and 0.015 ETH at 30 gwei, whatever the token amounts.
Anyone can copy a token's name and ticker, so the contract address is the identifier that counts. Token approvals have no expiry date.
The SEC's March 2026 interpretation sorts crypto assets by their characteristics, uses and functions. Its examples of non-security digital commodities include native coins and at least one ERC-20-based token, so the label alone settles nothing.

A coin belongs to its own chain

A coin is built into a blockchain's protocol. Bitcoin's developer documentation says miners collect the block reward and transaction fees for each block they add. Its glossary defines the block reward as the block subsidy (newly available satoshis) plus the transaction fees paid, and one bitcoin equals 100,000,000 satoshis.

On Ethereum, ether (ETH) pays transaction fees, is staked to secure the network, and is issued to validators at a rate the protocol sets. Solana's equivalent is SOL: every Solana transaction requires a fee paid in SOL.

A coin is part of the chain's own rules, so it does not depend on any contract. That is why ETH is not itself an ERC-20 token. ETH existed before the ERC-20 standard, and ethereum.org's wrapped-ether page says ETH ownership is managed by the Ethereum protocol through an account balance.

How a token is created and moved

A token has no chain of its own. Ethereum's glossary defines a token as a tradable virtual good defined in smart contracts on the blockchain. A smart contract is a program of code and data that sits at a specific address on the chain and runs as programmed, according to ethereum.org's smart contract documentation.

ERC-20 is Ethereum's token standard for fungible tokens. The EIP-20 text describes itself as "a standard interface for tokens" and lists functions such as balanceOf, transfer, approve, allowance and transferFrom.

The contract keeps the balances: once deployed, it keeps track of the created tokens. Two related standards cover other kinds of token. Under ERC-721, the pair of contract address and token ID must be globally unique, which is the basis of NFTs. ERC-1155 lets one contract hold any mix of fungible, non-fungible and semi-fungible tokens.

Solana does the same job differently. Its tokens are called SPL tokens and are handled by a token program. A mint account identifies each token and records its supply and decimals. A wallet needs at least one token account for each token it holds, and it can own more than one for the same token.

Coin and token, side by side

The table compares technical attributes only, using Bitcoin, Ethereum and Solana as the documented examples.

Attribute	Coin (native asset)	Token (issued on an existing chain)
Where it lives	In the chain's own protocol, as account balances (Ethereum) or transaction outputs in satoshis (Bitcoin)	In a contract (Ethereum) or a token program and mint account (Solana)
Network role	Pays fees; ETH is also staked to secure Ethereum; Bitcoin's block reward is paid in it	Whatever its contract defines; on Ethereum and Solana the network fee is still paid in the host coin
Identifier	The chain itself; native ETH is not an ERC-20 token	A contract address (Ethereum) or mint account (Solana)
Standard interface	None needed; ETH predates ERC-20	ERC-20, ERC-721, ERC-1155 on Ethereum; SPL on Solana
Who can create more	Protocol rules; on Ethereum, new ETH is issued to validators	The token's own code; on Solana, a mint authority can create new units and a freeze authority can freeze token accounts

Example: the cost of a token send

Gas measures computation on Ethereum. Ethereum's documentation gives the fee as units of gas used times (base fee plus priority fee), says a standard ETH transfer requires a gas limit of 21,000 units, and says fees have to be paid in ETH. One gwei is one billionth of an ETH.

fee (ETH) = gas used x (base fee + priority fee, in gwei) / 1,000,000,000
fee (USD) = fee (ETH) x ETH price (USD)

Illustrative example. Three inputs are assumptions, not market data: a combined gas price of 10 gwei, an ETH price of $2,500, and 50,000 gas for one ERC-20 transfer. Only the 21,000 figure comes from the documentation. Real token contracts use different amounts of gas, and the base fee changes from block to block.

One plain ETH transfer: 21,000 x 10 / 1,000,000,000 = 0.00021 ETH, about $0.53.
One ERC-20 transfer: 50,000 x 10 / 1,000,000,000 = 0.0005 ETH, or $1.25, about 2.4 times the ETH transfer.
Ten ERC-20 transfers: 0.005 ETH ($12.50) at 10 gwei, or 0.015 ETH ($37.50) at 30 gwei.

The ETH a token holder needs depends on how many transactions they make and on the gas price, not on how many tokens they move. The amount sent is not an input to the fee formula. Gas used still depends on what the contract's code does, so two transfers of the same token can cost different amounts.

All of the fee comes out of the sender's ETH balance, so a wallet that holds the token but no ETH cannot pay for the transfer itself. Ethereum's wrapped-ether guidance makes the same point: keep some native ETH for gas.

Telling them apart in a wallet

Wallets and block explorers list coins and tokens side by side, so the label is not enough. An ERC-20 token is identified by its contract address. Native ETH is recorded by the protocol as an account balance and is not an ERC-20 token. Anyone can deploy a contract with any name or symbol, so ethereum.org warns that those fields cannot be relied on for security.

Ethereum.org's check is to get the contract address from the organization that issues the token and compare it with the one in the wallet. Scam tokens cannot use the same contract address. The same guide warns that holder balances and transfer events can be faked, and that a block explorer's scam label is useful but not authoritative.

Approvals and issuer controls

The ERC-20 approve function lets another account spend tokens on the owner's behalf. Ethereum.org's guide to revoking token access notes that many platforms ask for unlimited approval and that contract permissions have no expiry date. Disconnecting a wallet from a site does not remove them, and malicious developers build backdoors into contracts to reach users' funds.

Ethereum.org's security guidance advises against unlimited spend limits and suggests approving only what a transaction needs. The same page describes airdrop scams, where a free token leads the recipient to a fake site and a harmful transaction.

Supply and freeze controls are a separate question. On Solana, a token's mint account names a mint authority and a freeze authority. EIP-20 describes only basic functionality for transferring and approving tokens, while ethereum.org's scam-token guide notes that a contract can report balances as "whatever the contract developer wishes." That is why the contract matters more than the listing.

Labels do not set legal status

The coin/token split is technical; U.S. securities law asks different questions. On March 17, 2026, the SEC issued an interpretation, joined by the CFTC, that was published in the Federal Register at 91 FR 13714 and took effect on March 23, 2026. It sorts crypto assets into five categories "based on their characteristics, uses, and functions": digital commodities, digital collectibles and digital tools, which are not themselves securities; stablecoins; and digital securities, which are.

According to the SEC's fact sheet, the CFTC will administer the Commodity Exchange Act consistent with the interpretation.

The stablecoin category carries a condition. The release says payment stablecoins from a permitted issuer will not be securities once the GENIUS Act takes effect. The Act had not yet taken effect as of October 2026: under Section 20 of the GENIUS Act (Public Law 119-27), it takes effect on January 18, 2027, or 120 days after federal regulators issue final implementing rules, if that comes first. Other stablecoins "may or may not be securities depending on their characteristics." The release also allows for assets that fit none of the five categories or more than one.

The release's own examples show that the coin/token label does not decide the category. Its list of digital commodities includes native coins such as Bitcoin (BTC), Ether (ETH) and Solana (SOL), and also Chainlink (LINK). Chainlink's documentation describes LINK as an ERC-677 token that inherits functionality from the ERC-20 standard. The release ties each example to its characteristics as of the release date, and states that all devices and instruments with the economic characteristics of a security are securities "regardless of format or label."

The Howey test still applies. The release says it does not supersede or replace that test, which is binding legal precedent from SEC v. W.J. Howey Co. (1946).

Under the release, a non-security crypto asset becomes subject to an investment contract when an issuer offers it by inducing an investment of money in a common enterprise, with promises of essential managerial efforts from which buyers would reasonably expect profits. That contract can end, and it does not turn the asset itself into a security.

The SEC staff's 2019 framework for investment contract analysis of digital assets is now marked withdrawn on the SEC website. Footnote 21 of the release says the interpretation supersedes it. Status therefore turns on the facts of each asset and each offering, whether the asset is called a coin, a token or neither.

Frequently asked questions

Is a stablecoin a coin or a token?

On Ethereum it is a token. Ethereum.org describes stablecoins as Ethereum tokens designed to stay at a fixed value, whatever the word "coin" in the name suggests. Legally, only payment stablecoins from a permitted issuer are excluded from the definition of security under the GENIUS Act, once it takes effect (it had not as of October 2026). The SEC release says other stablecoins may or may not be securities, depending on their characteristics.

What happens if tokens are sent to a contract that cannot handle them?

They can be lost for good. The ERC-20 page says tokens sent to a contract not built to handle them can be permanently lost, because the standard has no way to notify the receiving contract. As of June 20, 2024, the page counted at least $83,656,418 lost this way.

Does revoking a token approval cost anything?

Yes. Revoking is an on-chain transaction, so the revoke guide says a fee has to be paid, in the host chain's coin. It also says revoking does not affect staking, pooling or lending positions. Tools such as Etherscan's token approval checker can list approvals and revoke them.

Are coins and tokens taxed differently in the US?

The label itself does not change the federal definition. The IRS digital assets page defines digital assets as any digital representation of value recorded on a cryptographically secured distributed ledger or similar technology. Its examples include cryptocurrencies such as Bitcoin, stablecoins and NFTs, and it says digital assets are property for U.S. tax purposes, not currency.

How a particular transaction is taxed depends on the transaction, so check the IRS page (last updated September 2, 2026).

Why does wrapped ETH exist if ETH is already on Ethereum?

ETH does not follow the ERC-20 standard, so applications built around ERC-20 tokens would otherwise need a separate interface for it. Wrapped ether (WETH) is an ERC-20 token backed 1:1 by ETH. Depositing ETH into the WETH contract mints the same amount of WETH, and redeeming WETH burns it and returns the ETH. Wrapping and unwrapping both cost gas, paid in native ETH.

A checklist before holding a token

Get the contract address (or Solana mint account) from the issuing organization and compare it character by character with the one in the wallet or explorer.
Keep enough of the host chain's coin for the transfers you expect to make. A token balance cannot pay for its own transfer.
When a site asks for an approval, set the limit to what the transaction needs rather than unlimited. Review existing approvals with a revoke tool from time to time.
Check whether the token's contract or mint account allows new supply or freezing, and who controls it.
Treat "coin" or "token" as a description of technical design, not a statement of legal status.