Token Chinese Translation Deep Dive | Understanding the Fundamental Difference Between Tokens and Coins in One Article

Cryptocurrency investors often encounter a common confusion: How exactly do Token and Coin differ? Why are their Chinese translations both called “代幣” (token) or “加密貨幣” (cryptocurrency)? Behind this naming confusion lie two entirely different types of blockchain assets. This article will begin by exploring the Chinese meaning of Token, systematically analyzing the fundamental differences, investment characteristics, and trading methods of these two asset classes.

From Confusion to Clarity | The Mystery of Token and Coin Naming

In the Bitcoin era, the crypto world was relatively straightforward. Projects like Bitcoin, Litecoin, and Dogecoin each had their own independent blockchains, collectively referred to as “Coins.” But everything changed with the advent of Ethereum in 2015. Ethereum introduced the ERC-20 token standard, enabling anyone to quickly issue new digital assets on the existing blockchain. These assets are collectively called “Tokens.”

Why does this cause confusion? Because the Chinese terms “代幣” (dàibì) and “加密貨幣” (jiāmì huòbì) are used to describe both Token and Coin, leading many investors to struggle to quickly determine the true nature of their holdings. Simply put, the Chinese meaning of Token is “pass,” “token,” or “certificate,” representing proof of certain rights or services, not an independent currency system. Understanding this is the first step toward distinguishing the two.

Understanding Tokens | Definitions and Characteristics

Token is a digital asset built on an existing blockchain, representing the holder’s specific rights, access permissions, or investment shares. Unlike Coins, which require extensive infrastructure support, Tokens leverage the security and computational power of existing blockchains (most commonly Ethereum) to operate.

Currently, Ethereum is the largest public chain in terms of Token issuance. These Tokens include DeFi project tokens (such as UNI, AAVE, MKR), Layer-2 network tokens (like MATIC), and NFT-related tokens (such as SAND, APE). The key to understanding Tokens is: they do not have their own blockchain but possess independent economic models and application scenarios.

The Three Main Types of Tokens | Payment, Utility, Asset Tokens

According to the classification standards of the Swiss Financial Market Supervisory Authority (FINMA), Tokens can be divided into three main categories:

Payment Tokens (支付型Token)
These tokens primarily aim to facilitate fast, secure, and low-cost value transfers. Stablecoins (like USDT, USDC) are typical examples, pegged to fiat currencies such as USD to reduce volatility.

Utility Tokens (功能型Token)
Utility tokens function like “tickets” or “passes” that grant holders access to specific applications or services. Most ERC-20 tokens on Ethereum fall into this category. For example, Uniswap’s UNI token grants holders voting rights in protocol governance.

Asset Tokens (資產型Token)
These tokens represent ownership or investment shares in real assets or projects. Holders become participants in the project and can benefit from its appreciation. It’s important to note that, in most cases, investors gain profit-sharing rights rather than company equity or dividend rights.

While these three categories are conceptually distinct, in practice many tokens exhibit two or even three characteristics simultaneously, making boundaries less clear.

Token vs. Coin | Deep Comparison Across Five Dimensions

The fundamental difference is: Coins have their own blockchain ecosystem, while Tokens are built on existing blockchains. Bitcoin operates on the Bitcoin blockchain; Ether on the Ethereum blockchain. They are native assets of their respective networks. Tokens lack their own blockchain, which often results in less mature application ecosystems and sometimes the inability to independently develop complex applications.

Investment Perspectives | Opportunities and Risks of Tokens and Coins

From an investment perspective, both Tokens and Coins have their advantages.

Coins’ strength lies in the stability of their underlying infrastructure value. Bitcoin and Ethereum are committed to solving fundamental blockchain issues and providing foundational support for the entire ecosystem. If such projects fail, there are often no alternatives. For example, projects like QTUM and BTM have gradually declined due to insufficient infrastructure value.

Tokens excel in application diversity and rapid iteration. They are not limited by blockchain design and can quickly launch new applications, services, or product lines. MakerDAO’s RWA (Real World Assets) initiative is a good example—they can flexibly expand on existing infrastructure without overhauling the entire system.

More importantly, Token prices tend to be far more volatile than Coins. Comparing the price fluctuations of UNI, SNX, MKR with BTC and ETH, you’ll find Tokens experience more dramatic rises and falls in bull markets. This creates more opportunities for short-term traders but also entails higher risks, especially for newly launched Tokens, where liquidation risks are more prominent.

Mastering Two Major Trading Methods | Spot and Margin Trading

Investing in Tokens can be approached similarly to Coins, mainly through two methods:

Spot Trading | Actual Ownership, Controlled Risks

Spot trading involves full payment for actual assets. For example, if UNI is priced at $3, buying 1 UNI requires paying $3 and owning that token outright. You become the true owner, free to transfer or trade at will.

The main risk in spot trading is counterfeit tokens. Under the ERC-20 standard, anyone can issue tokens with the same name. For example, Team A issues a valuable “ABC” token; seeing the opportunity, Team B issues a similarly named “ABC” token with no value, or even malicious intent. Investors unfamiliar with verification may buy fake tokens, facing total loss. Therefore, always verify the token’s contract address on the official website or blockchain explorers like Etherscan before trading.

Margin Trading | Leverage Amplifies, Risks Double

Unlike spot trading, margin trading (including CFDs and U-Contracts) is a non-full payment method. You only need to deposit a portion of the capital as margin to control a larger position. For example, using 10x leverage to long UNI at $3, only $0.30 is needed to open a position of 1 UNI.

The advantage of margin trading is high capital efficiency, but it mostly involves derivatives rather than actual Tokens, thus avoiding counterfeit risks. However, leverage is a double-edged sword—while it amplifies gains, it also magnifies losses. The high volatility of Tokens makes margin trading riskier. Daily price swings over 20% are common, especially for new projects. Experts recommend not exceeding 10x leverage and constantly monitoring positions to prevent liquidation.

Getting Started with Token Trading | Three Steps to Begin

Whether you choose spot or margin trading, the first step is to select a safe, regulated trading platform. Here’s an example using CFD brokers to demonstrate the basic process:

Step 1: Login and Search

Visit the platform’s official website, click login. If you don’t have an account, click “Create Account,” complete registration, fill in personal information, and verify your identity. After logging in, enter “UNI” in the search box to find related information.

Step 2: Choose Trading Parameters

From the search results, click on Uniswap to access the trading page. Based on your risk appetite and trading plan, fill in:

• Trade direction (buy or sell)
• Order type (market or limit)
• Quantity
• Leverage (1x for spot, 2-10x for margin)
• Stop-loss and take-profit levels

Step 3: Place Order

After confirming all parameters, click “Buy” or “Sell” to execute the order. The platform will update your position details and floating profit/loss in real time.

With these three simple steps, you can start trading Tokens. Remember: choosing a regulated, highly liquid, reputable platform is essential to safeguard your funds.