Understanding the Meaning of Token in Chinese: A Complete Guide to the Differences Between Passports, Tokens, and Coins

Many cryptocurrency investors often confuse the concept of Token in Chinese, mistakenly believing that Token and Coin are the same. In reality, they differ fundamentally in technical architecture and investment attributes. As the Ethereum ecosystem exploded, the concept of Token gained increasing attention, but in Chinese context, both are translated as “代幣,” which has only deepened the confusion. This article will thoroughly analyze the true identity of Token to help you quickly grasp this important concept.

What exactly is a Token in Chinese? A 3-minute overview of the core definition of a token

Token in Chinese is commonly translated as pass, token, or digital token. It is a digital asset operating on an existing blockchain, representing specific rights, certificates, or values, and can be traded, transferred, and exchanged.

The earliest cryptocurrencies, such as Bitcoin, Litecoin, and Dogecoin, are all called Coins. It wasn’t until Ethereum introduced the ERC-20 standard in 2015 that anyone could easily issue their own Token on Ethereum. This innovation radically transformed the crypto ecosystem, leading to a rapid explosion in the number of Tokens. To this day, Ethereum remains the blockchain with the largest issuance of Tokens.

Simply put, a Token is an application-layer asset built on an existing blockchain, not a native asset of a public chain. It is not the name of a specific token but a collective term that includes DeFi tokens (like UNI, AAVE, MKR), NFT tokens (like SAND, APE), Layer-2 tokens (like MATIC), and other application-based assets.

How to distinguish and apply the three main types of Tokens

According to standards set by the Swiss Financial Market Supervisory Authority (FINMA), Tokens are divided into three categories, each with specific purposes:

Payment Tokens

As the name suggests, Payment Tokens are designed to facilitate secure, efficient, and low-cost transactions. Stablecoins are typical examples. These Tokens aim to maintain relatively stable value, allowing users to use them confidently for payments.

Utility Tokens

The primary purpose of Utility Tokens is to provide access rights to various applications, acting like a key to unlock services. Most ERC-20 tokens on Ethereum fall into this category, such as Uniswap’s UNI token, which allows holders to participate in platform governance, earn fee sharing, and more.

Asset Tokens

Asset Tokens represent ownership of a particular project or asset. Holding them is akin to being a stakeholder in that project, sharing in the appreciation of the token’s value. However, it’s important to note that in the crypto space, asset tokens typically do not involve company equity or dividend rights; they are purely value representations.

In practice, many Tokens possess multiple attributes simultaneously. For example, UNI has governance functions, can share trading fees (asset attribute), and also serves as a means of payment. Strictly classifying a Token into only one category is often impractical.

The key differences between Token and Coin: blockchain level and functional distinctions

The fundamental difference between Token and Coin lies in blockchain ownership. Coins have their own independent blockchain network and are native assets of that network; Tokens are built on existing blockchains and do not have their own independent chain.

Specifically, Bitcoin (BTC) operates on the Bitcoin blockchain, and Ether (ETH) runs on the Ethereum blockchain; both are native assets of their respective networks. Conversely, Tokens like UNI, MKR, and AAVE depend on Ethereum’s infrastructure.

This difference results in that Coins can support entire application ecosystems on their own, while Tokens are limited to the ecosystem of the blockchain they reside on. Coins can upgrade and optimize their network protocols independently, whereas Tokens are constrained by the performance and rules of the underlying blockchain.

Why do some Coin projects fail? Because the value of Coins mainly comes from infrastructure development. If the core functionality isn’t accepted by the market (like QTUM, BTM), it’s difficult to turn around. Tokens, on the other hand, can flexibly shift their application focus.

Investing in Tokens vs Coins: Which is more worthwhile?

This is the most common question among investors. The answer is: each has its advantages and disadvantages; there’s no absolute winner.

Advantages of Tokens: They offer strong application flexibility; projects can quickly adapt strategies based on market feedback. Even if one application fails, the team can develop new products, spreading risk. For example, MakerDAO shifted from stablecoins to real-world asset tokenization (RWA), demonstrating the adaptability of Token projects.

Advantages of Coins: As the foundational assets of public chains, Coins have clearer value propositions and stronger ecosystem support. BTC and ETH are prime examples; their infrastructure value is widely recognized.

The most critical difference is volatility. Token prices tend to fluctuate far more than Coins. Tokens like UNI, SNX, and MKR often experience price swings exceeding those of BTC and ETH, especially during bull markets. This creates more opportunities for short-term traders but also entails higher risks—liquidation risk increases accordingly.

In summary, if you are risk-averse, Coins offer more stability; if you can tolerate some risk and seek higher returns, Tokens might be a better choice.

How to trade Tokens? Practical guide for spot and margin trading

There are two main methods to invest in Tokens, each suited to different trading styles:

Method 1: Spot Trading of Tokens

Spot trading is the most straightforward approach—you buy real Tokens with actual funds and hold them. For example, if UNI is priced at $3, purchasing 1 UNI costs $3, and you own that Token outright.

The risk in spot trading is to avoid fake tokens. This is no exaggeration. The market often features tokens with identical names: a team A develops a valuable ABC token, but team B also issues a counterfeit ABC. The counterfeit may be worthless and not listed on exchanges. Buying fake tokens results in dead holdings.

Tips to prevent this: Always verify the contract address on the official website or blockchain explorer (like Etherscan) before purchasing. Confirming the official contract address is the only way to avoid such risks.

Method 2: Margin Trading of Tokens

Margin trading differs from spot trading in that you don’t need to pay the full amount upfront. It involves leverage, allowing you to control larger positions with less capital.

For example, using 10x leverage to go long on UNI at $3, you only need to pay $0.30 to control 1 UNI. If trading via CFDs or U-based contracts, you don’t actually hold the real UNI tokens but hold a contract certificate.

The advantage of margin trading is high capital efficiency; the downside is amplified risk. Token volatility is usually much higher than Coins, especially for newly listed tokens. Daily fluctuations over 10% are common, meaning liquidation risk is always present.

Operational advice: Keep leverage below 10x. For tokens with daily volatility of 15-20%, 10x leverage is already aggressive. Beginners should start with 3-5x.

Step-by-step: How to trade Tokens in 3 minutes

Using the example of DeFi token UNI, here is a complete process for trading on a regulated platform. The steps are similar whether you choose spot or margin trading.

Choosing a trading platform is crucial: Be sure to select a reputable platform regulated by authoritative financial authorities. Mitrade, as a regulated CFD broker, can serve as a reference.

Step 1: Register and log in

Visit the platform’s official website. If you don’t have an account, click “Create Account” and follow the prompts to fill in your information and complete verification. Log in to access the trading interface.

Step 2: Search for the Token and open the trading interface

Enter “UNI” in the search box. The system will display related results for Uniswap. Click on the result to open the UNI trading page.

Step 3: Set trading parameters and place an order

Configure your trade according to your strategy:

• Buy or sell: Long or short
• Order type: Market order, limit order, etc.
• Quantity: How many Tokens to buy
• Leverage (for margin trading): 1x, 5x, or 10x
• Stop-loss/take-profit: Set risk management levels

After setting these, click “Buy” or “Sell” to execute the trade immediately.

In summary, the three core points for investing in Tokens are:

First, understand that the Chinese concept of Token refers to an application-layer asset, not a foundational asset. This makes Tokens more flexible but also riskier.

Second, master the differences between spot trading (owning actual tokens) and margin trading (leveraged positions), and choose based on your risk appetite.

Third, always select a regulated, reputable platform, and strictly adhere to risk management principles—controlling position sizes and risks is the only way to survive long-term. With these foundational skills, you are ready to step into the world of Token investment.