Family members! Did you just enter the circle and get confused by 'coins' and 'tokens'? Do you think they are all 'digital assets' in the crypto world and it doesn't matter which one you buy?
I dare to guarantee that 90% of newbies lose money, which stems from not understanding the core differences between these two. Tokens are far more fragile than you think! As a seasoned crypto veteran with 5 years of experience and having seen countless projects go to zero, today I will share the hard truths and explain in the simplest terms why the 'glass heart' of a token should not be touched.
First, let me highlight key points for beginners: what we commonly refer to as 'coins', such as Bitcoin and Ethereum (native coins), are essentially 'underlying assets' with independent public chains, equivalent to the 'foundation' in the crypto world; whereas tokens are mostly 'derivative assets' issued based on existing public chains, more like 'temporary shacks' built on top of the foundation. If the shack collapses, the foundation may still be solid, but if the foundation is disturbed, the shack will also perish? No, on the contrary, the fragility of the shack far exceeds that of the foundation; it could fall apart with just a gust of wind.
The next four core reasons, if understood, can help you avoid 80% of the pitfalls, I suggest you save and review them repeatedly!
First, the technological dependency is too strong; without a "backing," it goes to zero. The issuance and operation of tokens entirely depend on others' public chains, such as many tokens being issued on Ethereum. This is like renting a place to open a store; if the landlord (public chain) has issues (like congestion, being attacked, or upgrade failures), your store (token) can't operate. Worse, if the project team lacks technical skills and the smart contract is full of vulnerabilities, hackers can empty the token pool in no time, turning your tokens into a useless string of code. In contrast, "coins" have their own independent public chains, which is like owning your home; you control the core technology, and the risk resistance is on a different level. I've seen many small tokens disappear from the market charts simply because the public chain they depended on lost popularity, with no recourse for the investors.
Second, the barriers to issuance are absurdly low, and the cost of "scamming" is nearly zero. How easy is it to issue a token? Just find a ready-made template, spend a few hundred dollars, and you can get it done in half an hour, without even needing a technical team. This leads to a mix of tokens in the market, with many project teams operating under the mindset of "raise a wave and then run," issuing tokens, inflating the market, and then quietly dumping their holdings, leaving retail investors stranded. In contrast, the issuance difficulty of "coins" is extremely high; for example, Bitcoin relies on mining networks to maintain itself, and Ethereum requires node consensus, supported by a massive technical community and computational power. It’s not easy to just "run away." I've seen the most outrageous token project where the team consisted of just two people, and they ran away with the money three days after issuing the token, leaving retail investors with nothing—this is nearly impossible in the world of "coins."
Third, the value anchor points are largely illusory, relying entirely on "pie-in-the-sky" promises. Real "coins" derive their value either from consensus (like Bitcoin's store of value) or from the ecological value of public chains (like Ethereum's smart contract applications), with solid "underlying logic." But tokens? Most are just "points" for a certain project, with their value entirely dependent on the project's "story"—today they say they will create a metaverse, tomorrow they claim to focus on DeFi, and once the story runs out or market enthusiasm wanes, the value plummets to zero. I previously encountered a so-called "metaverse token" where the project team just released a white paper without even a product prototype, relying solely on live broadcasts to pump up the price; in the end, once regulators got involved, it went to zero, leaving retail investors with nowhere to cry.
Fourth, regulatory risks are at an all-time high, and there is a constant possibility of being "delisted." Due to the low barriers to token issuance and numerous irregularities, they have always been a major focus of regulatory attention. Many token projects lack compliance qualifications, and once regulatory policies are implemented in their region, they can be directly delisted, preventing trading on exchanges, turning your tokens into "dead assets." In contrast, mainstream "coins" are generally safer because they have strong consensus and mature ecosystems, with many regions having clear regulatory frameworks. I have a friend who previously bought a niche token, which was suddenly named by regulators, leading to its immediate delisting by the exchange, leaving him unable to sell the token, which is now just a memento.
Speaking of this, some family members might ask: Can tokens be completely avoided? Not necessarily; there are still quality token projects, but the prerequisite is that you need to be discerning, understand their underlying logic, project team, and ecological value, rather than just following others' calls to buy.
Lastly, as usual, let me say something heartfelt: In crypto investment, safety is always the top priority. Don't be blinded by short-term high returns; first understand the essence of the asset before investing.
If you still have questions about "coins" and "tokens," or if you want me to analyze a specific project, feel free to leave a comment! Follow me @帝王说币 #加密市场观察 $BTC
