Bitcoin, Other Coins, and Tokens: Why There Are So Many

This article expands on the basics explained in our Crypto Basics hub.

When most people first hear about cryptocurrency, they learn about Bitcoin. Then they discover there are thousands of other cryptocurrencies—Ethereum, Litecoin, Cardano, Solana, and names that sound like they were invented by a random word generator. It’s confusing. If Bitcoin was supposed to be this revolutionary new money, why do we need all these others?

The short answer: Bitcoin solved one specific problem in one specific way. Other people saw different problems, or wanted to solve the same problem differently. So they created alternatives.

Why Bitcoin Came First

Bitcoin launched in 2009 as a response to a specific idea: what if we could create money that didn’t require banks or governments? Money you could send directly to someone else, anywhere in the world, without asking permission from anyone.

Bitcoin was the first project to make this work in a practical way. It created a system where transactions are recorded on a public ledger that anyone can verify, and no single person or company controls it.

But Bitcoin makes trade-offs. It’s slow—processing only a handful of transactions per second. It uses a lot of energy. And it’s designed to do one thing well: be a store of value and a payment system. It’s not designed to run complex applications or adapt quickly to new ideas.

Some people thought those trade-offs were worth it. Others disagreed.

Why Other Cryptocurrencies Exist

Once Bitcoin proved the concept worked, developers started asking: could we do this differently? Could we make it faster? Use less energy? Add new features?

This led to thousands of experiments. Some cryptocurrencies tried to improve on Bitcoin’s design. Others tried to solve completely different problems.

Here are a few common reasons new cryptocurrencies were created:

Different technical approaches. Some projects wanted faster transactions, lower fees, or less energy consumption. They built new systems from scratch with different rules.

New capabilities. Bitcoin can transfer value, but it can’t run applications. Ethereum was created to let people build programs that run on a blockchain—things like automated contracts or decentralized apps. This required a completely different design.

Specific use cases. Some cryptocurrencies were designed for privacy, others for supply chain tracking, others for digital identity. Each use case might need different features.

Competition and experimentation. In any new field, many teams try different solutions. Most experiments fail. A few succeed. This is normal in technology.

If you’re new to crypto, it helps to first understand what cryptocurrency actually is before comparing Bitcoin with other coins and tokens → What is Cryptocurrency? A Complete Beginner’s Guide 

The Difference Between Coins and Tokens

This is where things get confusing, because people often use “cryptocurrency,” “coin,” and “token” interchangeably. But there’s a useful distinction:

Coins have their own blockchain. Bitcoin runs on the Bitcoin blockchain. Ethereum runs on the Ethereum blockchain. These are separate, independent systems. Think of them like different operating systems—Windows, macOS, Linux. Each one runs on its own.

Tokens are built on top of someone else’s blockchain. They don’t have their own system. Instead, they use an existing blockchain’s infrastructure. For example, thousands of tokens run on Ethereum’s blockchain. They use Ethereum’s technology but serve different purposes.

An analogy: coins are like operating systems. Tokens are like apps that run on those operating systems.

Why would someone create a token instead of a coin? Because building an entire blockchain from scratch is hard. If you just want to create a digital asset for a specific purpose—maybe representing ownership in a project, or points in a game, or access to a service—it’s much easier to create a token on an existing blockchain.

This is why there are so many tokens. Creating one doesn’t require building a whole new system. It’s relatively easy, which means many projects do it. It also means many tokens are low-quality or disappear quickly.

Why Most of Them Don’t Matter (For Now)

Here’s the reality: of the thousands of cryptocurrencies that exist, most are experiments. Many will fail. Some are outright scams. A few might become important.

As a beginner, you don’t need to understand or track most of them. You’re not missing out by ignoring the latest coin with a dog logo or a celebrity endorsement.

What’s more useful is understanding the categories:

• Bitcoin exists. It’s the oldest and most well-known. Some people see it as digital gold.
• Platform blockchains like Ethereum exist to let people build applications. They’re trying to be useful infrastructure.
• Specialized coins exist for specific purposes—privacy, payments, file storage, etc.
• Tokens exist for all sorts of reasons, many of them experimental or speculative.

You don’t need to pick a favorite or choose which one is “best.” Different projects have different goals. Some might prove useful over time. Right now, your job is just to understand the landscape, not memorize names.

Why This Happens in New Technologies

If this all seems chaotic, that’s because it is. But it’s not unique to cryptocurrency.

In the early days of the internet, there were dozens of competing web browsers, search engines, and social networks. Most disappeared. A few became dominant. The same thing happened with smartphones, streaming services, and electric cars.

When a new technology emerges, nobody knows exactly what form it should take. So people experiment. They try different approaches. The market—and time—eventually decides what’s useful.

Cryptocurrency is still in that experimental phase. Thousands of projects exist because people are still figuring out what works.

What You Actually Need to Know

You don’t need to research every cryptocurrency. You don’t need to have an opinion on which ones are “good.”

What helps is understanding:

• Bitcoin exists as one approach to digital money. It has trade-offs.
• Other coins exist because people wanted different features or had different goals.
• Tokens are easier to create, which is why there are so many. Most won’t matter.
• The space is experimental. Many projects will fail. That’s normal.

The number of cryptocurrencies isn’t a sign that crypto is broken or a scam. It’s a sign that people are experimenting with a new idea in many different ways. Most experiments fail. That’s how innovation works.

Your job as a beginner isn’t to pick winners. It’s to understand what’s happening and why.

Key Takeaways

• Bitcoin came first and solved a specific problem: creating money without banks or governments
• Other cryptocurrencies exist because people wanted different features, capabilities, or solutions
• Coins have their own blockchains; tokens are built on existing blockchains
• Creating a token is relatively easy, which is why thousands exist
• Most cryptocurrencies are experiments, and many will fail or disappear
• You don’t need to understand or track most of them—focus on understanding categories, not memorizing names
• The crypto space is still experimental, and that’s normal for emerging technologies

Coins run on their own blockchains, while tokens are built on top of an existing blockchain. → What is Blockchain? Explained Simply for Beginners

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For further reading:

• Bitcoin whitepaper (PDF) — the original document that started it all, written in plain language
• What is Ethereum? — a beginner-friendly explanation of platform blockchains