From zero
04 From zero · Crypto markets

Ethereum and tokens

Most of what the news calls a cryptocurrency is not a currency: it is a token. The difference is not the name — it is where the balance lives, and who can change the rules.

Renato UlianovOpening · 21 s · in Portuguese

The sentence
The project launched a token on Ethereum following the network's standard, the contract became public, and every transfer started costing gas.

Blurred on purpose. Five words, and four of them almost nobody separates properly.

The correction

Most are not currencies

When the news says there are thousands of cryptocurrencies, it is counting wrong. Networks with their own coin are few — Bitcoin from the last lesson is one, Ethereum is another. The rest, the overwhelming majority, are tokens.

And a token is not a smaller currency. It is a different category of thing. The native coin is created by the network itself and is what pays the fee for anything to happen. A token is a balance recorded inside a program somebody published on that network.

Native coin Token
ExampleEther, on EthereumAlmost everything else
Who creates itThe network's ruleWhoever published the contract
Where the balance livesIn the network's ledgerIn a table inside the contract
Who can change the rulesOnly the whole network, togetherWhoever wrote the program
Pays the fee?Yes, it is what paysNo — the fee comes out in native coin
The last row catches everyone out: to move a token you need the network's native coin to pay the fee. A wallet full of tokens and no native coin is a stuck wallet.
What a contract is

A program that lives in the ledger

Smart contract is a bad name: nothing about it is a legal contract and nothing about it is smart. It is a program published on the network, with its own address, that anyone can call and that runs identically on every machine.

A token is one of those programs. Inside it there is a table: which address holds how much. Transferring a token is not touching the network's ledger — it is asking the program to subtract from one row and add to another.

Tap the button and watch the table change. That is literally what happens.

The table inside the contract
The addresses and numbers are made up. What is real is the shape: a token balance is a row in the contract's internal bookkeeping, not a value in the network's ledger.
What the network guarantees

That it runs the same — not that it is honest

Here is the most useful sentence in this lesson, and the one almost no explanation says: the network guarantees the program will run exactly as written, for everyone, with nobody able to interfere. It guarantees nothing about what is written.

A contract can have a function that mints new tokens out of nothing. It can have one that stops certain addresses from selling. It can have one that sends everything to whoever published it. None of that is a network failure — it is the program doing what it was programmed to do.

Because the code is public, it can be checked. But checking requires being able to read code, which is why an entire audit industry exists. For a beginner the practical lesson is simpler: “it's on the blockchain” does not mean “it's safe”.

The standard

Why any wallet shows any token

If every contract invented its own way of saying “what is the balance” and “transfer this”, no wallet could show any token without bespoke work. So a standard exists: a set of functions with agreed names that every token follows.

Following the standard is what makes a brand-new token appear in your wallet on its own, the day it is created. It is an enormous convenience — and it is also why creating a token costs almost nothing. Showing up in a wallet is a sign of nothing: it is just the standard working.

The proof

Now read the sentence

It's the same one from the top, unblurred. Tap each highlighted part.

The project launched a on following the network's , the became public, and every transfer started costing .
Start here

Five words

Two are the network, two are the program, and one is the price of using it. Tap one.

Five taps and the sentence is done.

You can already answer these

If this landed, the lesson did what it promised

  • A native coin is created by the network; a token is created by a contract.
  • A token balance lives in a table inside the program, not in the ledger.
  • The network guarantees the contract runs the same — not that it is honest.
  • To move a token you need native coin to pay the fee.

Renato UlianovClosing · 39 s · in Portuguese

Educational material. The addresses and balances in the figure are made up, and this page names no real token, project or price. Creating a token is cheap and requires nobody's permission — nothing here is, or should be read as, an assessment of any of them.