Recently, many people still can't distinguish between Token and Coin, which is actually a very good question because it is indeed easy to confuse them.

Early cryptocurrencies were called Coins, such as Bitcoin, Litecoin, Dogecoin, and later, with the emergence of Ethereum, the concept of Token became truly popular. In Chinese, they are all translated as "代币" (tokens), so many people can't tell them apart. Simply put, Tokens do not have their own independent blockchain; they are issued on other people's public chains, for example, most Tokens are issued on Ethereum as ERC-20 standard tokens. Coins, on the other hand, have their own native blockchain, such as Bitcoin, ETH for Ethereum itself, and SOL for Solana.

After Ethereum launched the ERC-20 standard in 2015, anyone could issue Tokens on Ethereum, which directly led to an explosive increase in the number of Tokens. Now, Ethereum is the public chain with the largest Token issuance volume.

From a functional perspective, Tokens can be roughly divided into three categories. First are payment Tokens, mainly used for transfers and payments; stablecoins are a typical example. Second are utility Tokens, which provide access rights to applications; most Tokens on Ethereum belong to this category. Lastly are asset Tokens, holding them is like owning a share of a project, somewhat similar to stocks, but be aware that Tokens in the crypto space usually do not carry dividend rights or ownership rights.

Regarding security, Tokens are indeed riskier than Coins. Because Tokens depend on the security of the underlying public chain, if the public chain is attacked, the Tokens will also be affected. Moreover, Tokens are more prone to issues like malicious issuance, team exit scams, and smart contract vulnerabilities. Therefore, be especially cautious when issuing Tokens on new public chains.

Why do so many people still invest in Tokens? Mainly because Tokens have greater application extensibility and are easier to implement. The value of Coins mainly lies in building infrastructure; if it fails, there are no alternatives. But Tokens are different; they can provide various applications and services, and if one fails, new products can be launched, such as MakerDAO's RWA business. Additionally, Tokens tend to be much more volatile than Coins; tokens like UNI and MKR often fluctuate more than BTC and ETH, offering more opportunities for short-term traders but also carrying higher risks.

There are two ways to invest in Tokens. One is spot trading, directly buying and holding to gain ownership of the tokens. A reminder here: be sure to watch out for counterfeit tokens, as many tokens share the same name; verify the contract address on the official website or blockchain explorer. The other is margin trading, using leverage to amplify returns, but this also increases risk. It is recommended not to use leverage exceeding 10 times.

Let's look at some well-known Token cases. UNI is the native token of Uniswap, which fell from $45 in June 2022 to $3.1, and now fluctuates between $3 and $9. MATIC is the native token of Polygon, with a relatively strong trend; it is resilient during dips and has large gains during rises. APE is the governance token of Bored Ape NFTs; it hit a record high of $32 in March 2022 and has been declining since, currently still in a bottom area.

In summary, Tokens and Coins each have their advantages, and they are closely related. Coins solve infrastructure issues, while Tokens provide various applications and services based on that infrastructure. If you want to invest in Tokens, be sure to understand the project background, choose secure trading channels, control your positions and leverage, and especially avoid investing too much in unfamiliar assets.