Popularly accepted in the cryptoverse, how a digital currency is described depends on its direct place or contract of residence. If the protocols governing the ownership and transfer of a cryptocurrency is founded on the core protocols of a layer 1 or base blockchain of that cryptocurrency then it’s regarded as a coin. Simply put, the cryptocurrency regarded as a coin is the native or inherent unit of accounting on that blockchain network. Common examples include Bitcoin, Cardano, Ethereum, and etcetera.
The term tokens were popularized by cryptocurrencies from projects also known as dapps built on smart-contract-compatible chains like Ethereum. Although existing on a chain with a native cryptocurrency like Ether in this case of Ethereum, these cryptocurrencies had different token economics and governance independent of the native currency. The primary point of connection and perhaps the only connection that exists in token generation and transaction fees, which must be paid in the native currency of the L1 chain. Some innovations around this now exist though. On CELO, a mobile-friendly chain, users can make a choice to pay fees either in the layer 1 native currency or the “token”.
Technically, in some cases, the term token and coin is used to differentiate between the unit of accounting and the network on which it exists i.e. the Bitcoin token, with ticker BTC, and the Bitcoin network, or the Cardano token (ADA) and the Cardano network. This method of usage is almost extinct.