Faisal Khan Follow
4 min read
Originally it was just the Bitcoin (BTC) with the invention of the Cryptocurrencies and the dawn of associated Blockchain technology but the past few years have seen a mushroom growth of the brand new digital assets classified into different categories. For a layman, most of the Cryptos are still digital forms of payment but the actually it is not that simple. Let’s dig in a little further & try to decode the “mystery”.
Cryptocurrencies:
The most generalized & commonly known of all the digital coins. Also known as the digital currencies & the payment tokens the premiere example of this kind of token is the crypto kingpin Bitcoin itself. With the booming Alt-coins market we have seen alternatives to bitcoin emerge as the digital currency. The most well-known are the offshoots of Bitcoin itself – Bitcoin Cash (BCH) & LiteCoin (LTC). They offer faster transactions & better scalability than the parent coin itself. Privacy-centric coin Moenro (XMR) is another good example which hides the amount & address of transacting parties. In purely technical terms Cryptocurrencies are meant to represent some inherent value without any valued added service, and supposed to function as a replacement to the traditional fiat currencies like US Dollar, Euro & Yen etc. Keep in mind though that Cryptocurrencies function on a DLT (Decentralized Ledger Technology) with no central authorities to monitor or control the transactions unlike role of the central banks in the current monetary system of fiat currencies.
Utility tokens:
These tokens given you the ability to use the services of a particular platform within the defined ecosystem. The tokens usually go on sale during the launch of the ICO. However, these tokens can also be earned by using the ecosystem of the platform in predefined ways. Utility tokens are not only a very good source of investment since their usefulness is only associated within the particular blockchain. The supply of such coins is fixed & you shouldn’t acquire the tokens in the hopes of seeing an increase in their value – having said that though, if the underlying product or service increases in value over time the App coins (or utility tokens) may see their value appreciate as well, being the only medium of transaction on the platform. Some of the well-known examples of Utility tokensareBasic Attention Token(BAT) – payment medium for the Brave browser,Storj (STORJ) – A decentralized Cloud storage platform,Golem– Global P2P marketplace for utilizing idle computing power &Filecoin –ABlockchain based storage network.
Funds raised for for different Digital Coins in the first half of2018
Security tokens:
This form of digital token is pretty similar to having an ownership of a company with the issuance of an IPO – only here you are issued “digital shares” but you get the right to the profits generated by the company. The tokens can be acquired at the launch of the ETO and are also knows as Equity tokens or Tokenized securities since they provide the team to raise money for the project & the coin owners to profit, but all under the ambit of SEC (Securities & Exchange Commission) regulations like any other security on a stock market. ETO provides a new way of raising funds for a project by issuing digital token for any company (blockchain based or Not) in a public or private setting. The most notable example in this case is a Berlin based startupNeufundactively pursuing multiple projects in the Blockchain island of Malta. A new dimension has been added to these Equity token offerings recently with the issuance of an ICCO called Palladium –The platform will basically issue‘tokenized convertible warrant’which is regulated by the MFSA (Malta Financial Services Authority) & subject to stringent EU rules as well. This warrant will give the investors the right to convert it into shares eventually, which is 3 years in the case of Palladium. Another notable example of is this type of token is tZero – a subsidiary of the popular online retailer Overstock Inc.
Reward tokens:
You can accumulate these tokens by using & actively taking part in a blockchain based Ecosystem. Holding of reward tokens also symbolizes your standing within the ecosystem. These types of tokens are difficult to value & therefore might not be a good choice from an investment perspective. They are more like your reward for using a blockchain platform & being a loyal user. You can, however, exchange reward tokens for any other Cryptocurrency on any digital exchange. One of the biggest examples in this regard is the blockchain based social media platformSteemit(STEEM) –where users are rewarded for posting content & engaging with other users of the platform. An interesting development has been the launch of unified blockchain based Rewards platform called Rewardstoken which is basically attempting to unify the rewards of the all the major merchandisers & retailers using their Ethereum (ERC 20 based) reward token. Eventually (as they claim), you can redeem these reward tokens anywhere in the world seamlessly.
Asset backed tokens:
These kind of tokens are backed by the physical commodities like Gold, Oil etc. and are linked to the prices of these commodities. This becomes their biggest drawback for people looking to into tap into the huge upside potential of digital coins however, since the price of these tokens does not exceed the price of the underlying physical asset. For people who are much more comfortable of having the ability to buy the physical asset with digital coins along being part of the blockchain movement Asset backed tokens are a good choice. These kind of coins have been on the rise with the extreme volatility of Crypto coins and being titled as having no intrinsic value. The biggest example isGoldmintproject which has issued a stable coin called MNTPbacked by Gold. Another recent addition to this has been the Dubai basedOneGram(OGC) project again backed by gold but with an interesting twist – 70% of the 1% transaction fee generated is reinvested to buy more Gold and added to the reserves of the precious commodity thus increasing the amount of gold that is being backed by each OGC coin (incentive for people looking to get greater appreciation). And finally we have a national Cryptocurrency Petro issued by Venezuela which is backed by its oil reserves. Although it has failed to gain much international acceptance it has nevertheless highlighted the growth in Cryptocurrencies & Asset backed tokens in particular.
Hybrid tokens:
As evident from the name these kind of coins can be used for multiple purposes like Payment for services and bonuses for work performed etc. Existing traditional business models which decentralize themselves & issue digital tokens, which can not only be used on the new platform but can be used to exchange with other Cryptocurrencies or as payments is an example of a Hybrid Token offering. An example of this is the Kik messenger app which issues their hybrid digital coin Kinto function as such.
Vote tokens:
Tokens which confer on a holder the right to vote and the ability to influence project development. Basically these kind of tokens are used for decision-making. Votem is an example of an online mobile voting platform which uses their tokens to make this process simpler & more secure. Here is a list of some of the other Voting platformsutilizing voting tokens.
Service tokens:
A token used as an internal currency to pay for project services being initiated but at the same time can be replaced by any other coin like Ethereum (ETH) without damaging the product or the ecosystem around which it is built around.
The biggest advantage of the Digital assets market is perhaps the wide variety of investment instruments that it offers in the form of these digital coins giving you an opportunity not only to earn from their immense growth potential but also to be a part of the this transforming blockchain movement.
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FAQs
What are the 4 types of cryptocurrency? ›
Q #1) What are the four types of cryptocurrency? Answer: The four major types include utility, payment, security, and stablecoins. There also are DeFi tokens, NFTs, and asset-backed tokens. Of all cryptocurrencies, the most common are utility and payment tokens.
How many types of digital coins are there? ›From a legal standpoint, there are mainly two types of digital currency, centralized, and decentralized.
What is the classification of cryptocurrency? ›But there are various kinds of cryptocurrencies. “Crypto can be classified into different categories, like DeFi, NFT, utility tokens, store of value tokens like bitcoin and litecoin, and yield farming tokens like Aave,” says Sidharth Sogani, CEO of Crebaco, a crypto research firm.
What are the 3 types of crypto coins? ›The Difference Between Coins and Tokens. There are three types of cryptocurrency out there. That includes bitcoin, altcoins, and tokens.
What are digital coins? ›Digital currency is any currency that's available exclusively in electronic form. Electronic versions of currency already predominate most countries' financial systems.
What are the two main types of digital currency? ›Digital currencies can be centralized or decentralized. Fiat currency, which exists in physical form, is a centralized system of production and distribution by a central bank and government agencies. Prominent cryptocurrencies, such as Bitcoin and Ethereum, are examples of decentralized digital currency systems.
What are the two main types of cryptocurrency? ›- Coins and altcoins. A coin is any cryptocurrency that uses its own independent blockchain. ...
- Tokens. Like coins, tokens are also digital assets that can be bought and sold. ...
- Bitcoin (BTC) ...
- Ether (ETH) ...
- Binance Coin (BNB) ...
- Tether (USDT) ...
- Solana (SOL) ...
- XRP (XRP)
- Bitcoin (BTC) Market cap: $315.4 billion. ...
- Ethereum (ETH) Market cap: $147.9 billion. ...
- Tether (USDT) Market cap: $65.3 billion. ...
- Binance Coin (BNB) Market cap: $48.0 billion. ...
- U.S. Dollar Coin (USDC) Market cap: $44.0 billion. ...
- Binance USD (BUSD) Market cap: $22.38 billion. ...
- XRP (XRP) Market cap: $19.8 billion. ...
- Dogecoin (DOGE)
A central bank digital currency can be described as the digital form of a country's fiat currency, whereas a cryptocurrency is also a digital currency, which is an alternative form of payment with unique encryption algorithms.
Whats the difference between tokens and coins? ›A token is a digital unit of value that represents an asset or utility. Unlike coins, tokens do not have their own blockchain and are issued on top of existing networks. Unlike coins, tokens are not mined in the process of transaction validation. Instead, they are minted.
How are digital assets classified? ›
The system splits digital assets into three categories: computational platforms, financial instruments and digital currencies.
What are the 5 properties of cryptocurrencies? ›- 1 – Security. ...
- 2 – Stability. ...
- 3 – Scalability. ...
- 4 – Supply. ...
- Other, mostly newer, coins also “burn” cryptocurrency tokens by sending them to inaccessible wallets.
Metaverse crypto is a type of cryptocurrency that funds each metaverse platform, and may include blockchain fees, node rewards, staking, and other standard crypto features and is ultimately used in the process of creating their own virtual world platforms.
Is NFT a cryptocurrency? ›NFT means non-fungible tokens (NFTs), which are generally created using the same type of programming used for cryptocurrencies. In simple terms these cryptographic assets are based on blockchain technology. They cannot be exchanged or traded equivalently like other cryptographic assets. Like Bitcoin or Ethereum.
Is Solana a layer 1 or 2? ›Solana is a Layer 1 blockchain designed to facilitate smart contracts and the creation of new decentralized applications (DApps).
Is XRP a layer 1 coin? ›XRP is a Layer 1 coin, which means it runs on its own network. However, XRP does not run on a Proof-of-Work consensus mechanism, which is what Bitcoin runs on.
Which digital coin is best? ›- Bitcoin (BTC) Market cap: Over $846 billion. ...
- Ethereum (ETH) Market cap: Over $361 billion. ...
- Tether (USDT) Market cap: Over $79 billion. ...
- Binance Coin (BNB) Market cap: Over $68 billion. ...
- XRP (XRP) Market cap: Over $37 billion. ...
- Terra (LUNA) ...
- Cardano (ADA) ...
- Solana (SOL)
| Rank | Name | Symbol |
|---|---|---|
| 1 | BTCBitcoin | BTC |
| 2 | ETHEthereum | ETH |
| 3 | USDTTether | USDT |
| 4 | BNBBNB | BNB |
As of November 2022, there are 21,844 cryptocurrencies in existence. However, not all cryptocurrencies are active or valuable.
How many types of cryptocurrency are there 2022? ›How many cryptocurrencies are there? In short, there are nearly over 10,000 as of 2022 - a severe increase from just a handful of digital coins in 2013.
Is BTC a coin or token? ›
Is Bitcoin a Token or a Coin? Bitcoin is a cryptocurrency, which has virtual tokens or coins that can be used to trade or make purchases.
What are the 5 largest cryptocurrencies? ›- Bitcoin (BTC) Market Cap: $458 billion. ...
- Ethereum (ETH) Market Cap: $216 billion. ...
- Tether (USDT) Market Cap: $66 billion. ...
- USD Coin (USDC) Market Cap: $54 billion. ...
- Binance Coin (BNB) Market Cap: $52 billion. ...
- Ripple (XRP) ...
- Cardano (ADA) ...
- Binance USD (BUSD)
...
Who owns the most bitcoins?
New coins are released on a regular basis and the prices of cryptocurrency change by the minute. Shiba Inu coin (SHIB) is one of the cheapest cryptocurrencies available on Coinbase. Shiba Inu coin price is $0.000011 as of Sept 22, 2022.
Who invented digital currency? ›Satoshi Nakamoto is a pseudonym for the person or people who helped develop the first bitcoin software and introduced the concept of cryptocurrency to the world in a 2008 paper.
Are Bitcoins physical or digital? ›Physical representations of Bitcoin have existed for a long time now. Over the years, several different renditions have also cropped-up, each with different compositional material, values, and purposes. However, it all started with the Casascious coin, created by Mike Caldwell in 2011.
Is cryptocurrency just digital money? ›Cryptocurrencies are digital tokens. They are a type of digital currency that allows people to make payments directly to each other through an online system.
Is Ethereum a token or coin? ›Since we know that coins have their own blockchain and tokens don't, is Ethereum a coin or token? Since Ethereum has its own blockchain, it's a coin. This also means that if you have a wallet that supports Ethereum, all assets that use the Ethereum blockchain, such as ERC20 tokens, are compatible with your wallet.
Is Shiba Inu a coin or token? ›Shiba Inu, a dog-themed meme coin, uses SHIB as its native token. It is an ERC-20 token whose popularity has skyrocketed since the success of Dogecoin. "Shiba Inu is commonly referred to as the "Dogecoin (DOGE) killer" due to its huge popularity.
Is Solana a token or coin? ›Again, think of Solana as a token that can power various apps rather than merely as a currency that transfers monetary value from one person to another.
What are the 4 classification of assets? ›
Assets can be broadly categorized into current (or short-term) assets, fixed assets, financial investments, and intangible assets.
What are the 3 classifications of assets? ›Classification of Assets
Convertibility: Classifying assets based on how easy it is to convert them into cash. Physical Existence: Classifying assets based on their physical existence (in other words, tangible vs. intangible assets). Usage: Classifying assets based on their business operation usage/purpose.
The four main types of assets are: short-term assets, financial investments, fixed assets, and intangible assets.
What are 3 benefits of cryptocurrency? ›- Protection from inflation – Inflation has caused many currencies to get their value declined with time. ...
- Self-governed and managed – ...
- Secure and private – ...
- Currency exchanges can be done easily – ...
- Decentralized – ...
- Cost-effective mode of transaction – ...
- A fast way to transfer funds –
Decentralization, Transparency, and Immutability are the 3 main pillars of blockchain technology.
What are the top 4 crypto? ›- Bitcoin (BTC) Market cap: $315.4 billion. ...
- Ethereum (ETH) Market cap: $147.9 billion. ...
- Tether (USDT) Market cap: $65.3 billion. ...
- Binance Coin (BNB) Market cap: $48.0 billion. ...
- U.S. Dollar Coin (USDC) Market cap: $44.0 billion. ...
- Binance USD (BUSD) Market cap: $22.38 billion. ...
- XRP (XRP) Market cap: $19.8 billion. ...
- Dogecoin (DOGE)
Below is a list of the next cryptocurrency to explode in 2022: Dash 2 Trade (D2T) - Overall Best Utility Token with Crypto Signals Set to Explode. RobotEra (TARO) - Top P2E Crypto in Newly Launched Presale. IMPT - Green Crypto Project Enabling Users to Reduce Carbon Footprint.
What is the best cryptocurrency to invest in 2022? ›- 1 – Bitcoin (BTC)
- 2 – Ethereum (ETH)
- 3 – Bitcoin Cash (BCH)
- 4 – Litecoin (LTC)
- 5 – Filecoin (FIL)
- 6 – Digital Cash (DASH)
- 7 – Dogecoin (DOGE)
- 8 – Ethereum Classic (ETC)
Cryptocurrency (also known as crypto) is a digital currency designed to work as a medium of exchange. It uses cryptography to secure and verify transactions, as well as to control the creation of new units of a particular digital currency.
Which Coin is next Bitcoin? ›Ethereum (ETH)
The network operates through “smart contracts” written in computer code that is uploaded to the blockchain which other cryptocurrencies operate through. Ethereum currently doesn't sell as high as Bitcoin, with its price (as of December 2022) at $1,265.54.
Who is the number 1 Crypto? ›
| Rank | Name | Volume(24h) |
|---|---|---|
| 1 | BTCBitcoin | $20,901,086,428 |
| 2 | ETHEthereum | $6,426,996,551 |
| 3 | USDTTether | $28,004,310,617 |
| 4 | BNBBNB | $1,030,364,917 |
Coinbase
Coinbase is by far the most popular and one of the best cryptocurrency exchanges because you can invest directly with USD. You can currently purchase Bitcoin, Ethereum, and Litecoin and 30+ other coins and tokens on the platform.
Most analysts believe that Shiba Inu could rebound in 2023 alongside the rest of the cryptocurrency market. If this happens, most analysts expect Shiba Inu to trade at an average price of $0.00004 in 2023. In the long term, analysts expect Shiba Inu to hit a high of $0.01 in 2025 if there is another major rally.
How do you know if a coin will pump? ›The easiest way to identify a pump and dump scheme is when an unknown coin suddenly rises substantially without a real reason to do so. This can be easily viewed on a coin's price chart. Coincheckup, for example, has set a benchmark of a 5% price increase in less than five minutes as its indicator.
Will there be a crash in crypto in 2022? ›The crypto crash of 2022 has seen major digital assets give back the gains following a string of high-profile implosions. On Nov. 11, 2022, exchanges FTX and FTX.US filed for Chapter 11 bankruptcy. The fallout from the crash is ongoing, including BlockFi filing for bankruptcy on Nov.
What coin is good for long term holding? ›Here are the top five cryptocurrencies with potential as long-term investments: Bitcoin (BTC) Ethereum (ETH) Cardano (ADA)
Which crypto will go high in future? ›Binance Coin
And as per the current scenario, Binance Coin's future looks bright which could pump prices to new highs. And hence as per the BNB price prediction, the BNB price might cross US$610 by the end of 2023. Hence, it is one of the top 10 cryptocurrencies worth investing in for 100x gains by 2023.
Dash 2 Trade (D2T) - Overall Fastest Growing Crypto Providing Trading Signals.
Which crypto wallet is best? ›- Coinbase Wallet - Best for Beginners.
- MetaMask - Best for Ethereum.
- TrustWallet - Best for Mobile.
- Ledger Nano S Plus - Best Crypto Hardware Wallet.
- Electrum - Best Desktop Bitcoin Wallet.
- BlueWallet - Best Mobile Bitcoin Wallet.
- Exodus - Best for Desktop.
As part of the implementation, Nakamoto also devised the first blockchain database. Nakamoto was active in the development of bitcoin up until December 2010. There has been widespread speculation about Satoshi Nakamoto's true identity, with a variety of people posited as the person or persons behind the name.
What is the main purpose of cryptocurrency? ›
A cryptocurrency is a digital currency, which is an alternative form of payment created using encryption algorithms. The use of encryption technologies means that cryptocurrencies function both as a currency and as a virtual accounting system.