How Coins Are Made
A coin is a piece of metal or, rarely, other material that has been certified by a mark or marks on it as having an intrinsic value. It is used as a medium of exchange and represents a significant evolution in the way people think about money. Coins are the backbone of digital currency systems, and a solid grasp of how they work is an essential first step for anyone interested in cryptocurrencies.
In the context of a cryptocurrency, a coin is a virtual unit of measurement that carries an inherent value and can be transferred between people in exchange for goods and services. While it is often compared to a paper bill, a coin has several distinct properties that make it unique. The most important distinction is that it operates on its own blockchain network, whereas a bill relies on the blockchain platform of a central bank to process transactions.
Traditionally, coins have been minted in precious metals like gold or silver, which confers both a high intrinsic value and a stable store of value. Precious metal coins were widely accepted as payment for goods and services throughout the world and facilitated trade and commerce. However, these metals have some disadvantages, such as their cost and proneness to corrosion and rust. Precious metal-based coins also enticed manipulation, such as clipping (removing some of the precious metal from the coin).
More recently, coins have been produced in less valuable materials like copper and brass, which are easier to manufacture and still retain many of the benefits of precious metals. While they are not as durable as precious metals, they are still more stable than paper bills, and they can be minted in large quantities.
A coin is made by rolling a slab of metal into a circular shape and stamping it with a design. Mint artists usually start with a sketch of what they want the coin to look like (1). They then sculpt the design into a 3-D clay or digital model (2), which they use as a template to transfer the design to a die (3). The die is stamped into the slab of metal, creating a coin with its obverse and reverse designs (4).
The value of a coin as a collector’s item or investment depends on its condition, specific historical significance, rarity, beauty of the design and general popularity with collectors. Coins minted as bullion typically have a face value that is less than the metal content of the coin.
Cryptocurrency is a growing field, and understanding how coins and tokens differ can help you get the most out of this new type of money. Coins operate on their own blockchain networks, while tokens are built on existing blockchain platforms and offer a range of additional functionalities. For example, a Basic Attention Token (BAT) is used to reward users for viewing ads on blockchain-based websites. Tokens have a broader application than coins, but they are usually associated with a particular project or ecosystem.