Cryptocurrencies are perhaps the most popular trend currently. Because of the decentralized system, the transactions are performed trade Bitcoin, and there is no need for an intervention of a third party, namely the bank.
Bitcoin, launched in 2009, is the first cryptocurrency and the most popular digital currency today. Following its success, more than a thousand other coins have been launched, each serving different purposes.
The term ‘cryptocurrency’ is mainly used for the ‘coins.’ Coins are different from tokens and AltCoins. AltCoins refers to all the cryptocurrencies apart from bitcoin. Coins are based on a blockchain network. A few AltCoins like Ethereum, Neo, Ripple and Omni have their blockchain networks. The others have diverged from Bitcoin.
When any particular asset is digitalized, it is called a token. There are many tokens based on utility, security, payment and exchange. They are similar to AltCoins, the only difference being they are built on other blockchain networks.
Given below is a list of different types of cryptocurrencies:
As the name implies, stablecoins are natural coins or tokens with relatively predictable value in the sense that it remains the same all the time.
Thus, the value doesn’t undergo a sudden fall or rise, unlike other cryptocurrencies like Bitcoin. Stablecoins assist in eliminating volatility in assets and other digital currencies.
Some of the popular stablecoins are USDC (Coin), USDT (Tether; backed by the USD with a ratio of 1:1), Gold Coin (GLC; backed by gold), and Tether Gold (XAUT), Ampleforth (AMPL; backed by algorithm), etc.
- Utility Tokens
They are digital coupons and vouchers that represent a value on the blockchain. The token issuer grants specific access to a good or service through the tokens, and by purchasing the token, you can acquire access to that service or product at a lower rate.
In the case of the crypto-based utility token, some jurisdictions are free from a financially regulated standpoint. However, the owner can lose all their money if the utility tokens lose value.
The utility token services mainly include rewards, social tokens, blockchain currencies or access to decentralized storage, etc.
Some popular utility tokens are Funfair, Brickblock, Golem, Sirim Labs Tokens, etc.
- Decentralized Finance Tokens (DeFi Tokens)
Decentralized finance are the finance apps that are powered by decentralization. The transactions and the ledger are directly controlled by the users with peer-to-peer transactions and access to global markets. There are no third-party interventions.
Every DeFi app runs on its native token. DeFi aims to take over the current financial industry with its decentralized platforms and make transactions easier and over a short time. If you are performing a DeFi transaction, you will be in control of the money and the entire transaction, which is not possible in a bank transaction using fiat currency.
Ethereum blockchain network drives these apps to run flawlessly. Some of the tokens are Solana, Chainlink, Polkadot, etc.
- Asset-Backed Tokens
Cryptocurrency tokens, whose values are backed by assets like fiat currency, real estate, gold etc., are known as asset-backed tokens. These tokens are mostly provided by the Equity Tokens Offer (ETO). The ratio between the value of tokens and the value of the assets can change and mainly depends on the owners.
Company shares also back some tokens, allowing you to trade company shares on crypto exchanges on digital platforms. Some assets also include oil, gas, sugar, etc.
Some popular asset-backed tokens include PAXG and DGX (backed by gold), BFToken, RRT Token, OilCoin, Wheat Token Coin, etc.
- Non-Fungible Tokens (NFT)
Non-fungible tokens or NFTs digital forms of artwork like music, artwork or music form. NFTs are mainly used for content like tweets, posts, blogs, writing, art, photography, videography, real estate, memes, GIFs, etc., built on blockchain networks.
It was in 2015 when NFT first hit the market. Decentraland is a popular NFT marketplace. It is backed by the Ethereum blockchain, and its social token is MANA. Other NFT platforms include OpenSea, Foundation, etc.
There are several types of cryptocurrencies today based on their value and utility. With the popularization of investment in cryptocurrencies, you can go for various digital currencies other than Bitcoin. Immediate Edge is a popular trading platform, and you can go to Crypto Genius to start cryptocurrency trading today.