What is the difference between a 'coupon' bond and a 'registered' bond? Coupon bonds.

Railroads normally paid interest on their loans twice a year. The accepted procedure was for companies to attach small coupons to bonds. Then, twice a year, bondholders cut coupons from their certificates and redeemed them for interest. A single coupon from a $1,000 bond was worth $15 to $50, so coupons from bearer bonds often traded like paper money. Half of all collectible bonds in this catalog are coupon bonds.

Coupons made interest payments simple. However, as companies grew, they found it increasingly difficult to count and track thousands of tiny coupons. Companies gradually dropped coupon bonds in favor of registered bonds. That allowed companies to pay interest directly to their registered bondholders.