Token Chinese definition: The fundamental difference between tokens and virtual currencies

What is a Token in Chinese? Differentiating the Two from a Noun Definition

In the world of cryptocurrencies, Token in Chinese is usually translated as “代幣” (dài bì), “令牌” (lìng pái), or “通行證” (tōng xíng zhèng), representing a form of digital rights or certificates that can be traded, transferred, and exchanged on the blockchain. Coin, on the other hand, corresponds to the concept of “币” (bì). Although they seem similar, there are fundamental differences.

In the early crypto ecosystem, major cryptocurrencies like Bitcoin, Litecoin, Dogecoin, etc., were primarily named as Coins, with clear boundaries. However, after the rise of the Ethereum ecosystem, a large number of tokens based on the ERC-20 standard emerged, blurring the lines between Coin and Token. Many investors still cannot clearly distinguish the true meanings of these two terms.

Technical Architecture Determines Identity: The Core Difference Between Token and Coin

The most fundamental difference lies in whether they have an independent blockchain.

Coins (such as Bitcoin, Ethereum, Solana) operate on their own Layer-1 blockchains and are the native assets of those networks, supported by complete infrastructure. In contrast, Tokens do not have their own blockchain; they are application-layer assets built on existing ecosystems (like Ethereum).

This difference leads to chain reactions:

The Three Identities of a Token: Functional Classification and Application Scenarios

According to the classification by the Swiss Financial Market Supervisory Authority, Tokens can be divided into three types, but in practice, they often overlap:

Payment Tokens
Focused on enabling secure, efficient, low-cost payments; stablecoins are typical representatives.

Utility Tokens
Provide access passes to applications, mainly ERC-20 tokens on Ethereum, where holding the token grants the right to use specific functions.

Asset Tokens
Represent participation rights in projects or ecosystems, similar to stocks, but the crypto space usually does not involve ownership or dividend rights.

In practice, a Token often possesses multiple attributes simultaneously, making absolute classification difficult.

Investment Opportunities and Risks

Compared to Coins, Tokens exhibit different investment characteristics:

Scalability Advantages
Token applications can be more scalable. If the underlying infrastructure (like Quantum Chain QTUM or Bytom BTM) fails, it’s hard to recover. Tokens can diversify development; for example, MakerDAO launched RWA business, demonstrating that failed applications can be replaced by new solutions.

Volatility and Opportunities
Token prices tend to be more volatile than Coins, especially for emerging tokens with more dramatic fluctuations. During bull markets, tokens like UNI, SNX, MKR often outperform BTC and ETH, creating opportunities for short-term traders. However, high volatility also means increased risks, including liquidation risks that require vigilance.

Two Trading Methods for Token Investment Plans

Spot Trading: Full Ownership of Actual Assets

Spot trading involves actual tokens as trading pairs. For example, if UNI is priced at $3, buying at that price means acquiring full ownership of 1 UNI.

Be especially cautious of fake tokens with the same name. When a token’s value surges, malicious teams may issue counterfeit tokens with the same name but no value. The way to prevent this is to verify the token’s smart contract address via the official website or blockchain explorer.

Margin Trading: The Risks and Rewards of Leverage

Margin trading is a non-full-amount trading method, where investors only need to pay part of the margin to control a larger position. For example, using 10x leverage to go long on UNI, when the price is $3, requires only $0.3 to control a position of 1 UNI. Under derivatives or U-based contracts, traders do not need to hold the actual tokens.

Risk control is crucial. The daily volatility of Tokens is much higher than BTC, especially for emerging tokens. Leverage should be set cautiously, generally not exceeding 10x, to prevent liquidation from sharp price swings.

The Importance of Choosing a Trading Platform

Whether for spot or margin trading, selecting a secure and regulated trading platform is the top priority for Token investment. Legitimate platforms provide sufficient fund protection, transparent trading mechanisms, and comprehensive risk control systems, forming the foundation for protecting investors’ rights.

Token investment opportunities complement traditional Coins— the former addresses application-layer needs, while the latter builds infrastructure. Understanding the differences between them enables more precise investment strategies.