Educational Byte: Using Coins and Tokens in Different Crypto Networks

Sometimes, transferring cryptocurrency funds or using certain applications could have a steep learning curve. That’s partly because there aren’t only one or three cryptocurrencies around these days, but thousands of them. Besides, it isn’t uncommon anymore to handle funds across several crypto platforms, using different coins. That’s why all crypto users need to know the difference between networks, tokens, and coins before sending or locking money into the wrong address.

Another solid reason to try and use different platforms is for the involved fees. Using the same token in one network may be cheaper and faster than in another, so learning how to choose the most convenient option doesn’t hurt.  Let’s check how that works.

Networks, Ledgers, or Chains

Maybe the first thing that comes to your mind when trading cryptocurrencies is that you’re using X currency (namely BTC, ETH, GBYTE, etc.), and that’s it. But actually, that’s not it. There’s a layer beneath what you can see: the infrastructure in which that coin, token, or contract inhabit and whose rules that transaction can’t but obey. That’s the network, distributed ledger, or chain involved.

A crypto network, distributed ledger, or chain refers to a decentralized system that securely records transactions across multiple computers and has its own set of rules and features. The terms aren’t equivalent in all contexts, but for final users, they all describe the same underlying technology. The fundamental layer, or the system (rules and fees included) you’re using to transact, and that’s different from the coin you selected.

Let’s use an example here with the stablecoin USD Coin (USDC). Originally, this was a token that worked on Ethereum only (the network, not the ETH coin), but nowit’s available in at least 16 more chains, including Avalanche, Celo, Flow, Polygon, and Obyte. Each one of these networks has its own version of USDC with its own address type. This occurs because USDC aims to be interoperable instead of working on just one network, and ledgers don’t natively connect with each other.

Besides, trading USDC on Ethereum is different from trading USDC on Obyte, for instance. Same token, but different networks, which implies different rules and costs. Ethereum average transaction fee (for ETH and all tokens) is currently at around $3.4. On the other hand, a transaction on Obyte often costs $0.00001. Therefore, in that case, trading USDC on Obyte would be cheaper than on Ethereum. Because again, same token, but different ledgers.

Tokens vs. Native Coins

The main distinction between these two types of coins is simple enough. Native coins, like ETH or GBYTE, are necessary for the respective network’s (Ethereum or Obyte) operation, while tokens are not. Native coins depend on the network and the network depends on them too, while for tokens, like the aforementioned USDC, the dependence is one-sided: they depend on the network, but not the other way around.

Usability is another factor. So, for instance, on Ethereum and similar networks, sending a native coin to a contract immediately triggers contract execution. However, to achieve the same effect with tokens, users first have to approve the contract to spend their tokens, then call the contract. That's two steps — a bit complicated. On the contrary, in Obyte, sending both native coins and tokens to an Autonomous Agent (AA) triggers its execution. Always one step and the same flow for both native coins and tokens. This is an exception among networks and not the rule, though.

Other than the mentioned differences, ‘native coins’ and ‘tokens’ can be identical things: coins built with cryptography within a distributed network. However, how a certain asset is perceived in the crypto world could be important for its value and trading methods.

Tokens, like stablecoins, are considered the same across different networks because they represent the same underlying value or asset, no matter where they are issued. For instance, a stablecoin like USDC on Ethereum and USDC on TRON both represent the same thing: a token backed by the U.S. dollar with the same price and purpose. These tokens are created following specific standards, which makes them function similarly across different networks, even though they exist in separate environments.

Native coins, like ETH on Ethereum or BTC on Bitcoin, are deeply tied to their respective chains, and their functionality is specific to that network. Its value also comes from that network and its features, and not from an external asset or platform. When these native coins are used on a different network, they become "wrapped" versions (like Wrapped ETH or Wrapped BTC).

This means the original coin is locked in a contract, and a tokenized version is created on another network. Wrapped tokens act as placeholders, but they aren’t the actual native asset—they’re representations of them. That’s why they’re treated differently, and traded separately on exchanges. Non-native tokens can also be wrapped to port them into different networks, but they’re often still treated and traded as the same thing, as we mentioned before.

Cross-chain Bridges

These are handy tools that allow users to transfer assets and data between different crypto networks. They work by locking assets on one chain and minting equivalent assets on another, enabling users to interact with multiple ecosystems seamlessly. This way you could, for instance, exchange USDC on the Ethereum network for the same amount on the Obyte network. We have the Counterstake Bridge for that.

In any case, if you’re using a token, remember to pick the network wisely. Fees and features will change accordingly. If you’re using a native coin, you may be already on their network, or explicitly using a wrapped version of it –and its ticker may give you a good clue (WBTC, for example). There are numerous multi-chain wallets, such as MetaMask, that will allow you to handle a diverse portfolio.

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