Get to Know All Different Types of Cryptocurrency

cryptocurrency

Since the launch of Bitcoin more than ten years ago, several new varieties of cryptocurrency have appeared. There are several other types of cryptocurrencies accessible today, including dog memes, non-fungible tokens (NFTs), and stablecoins. Their usage of the blockchain, a distributed ledger technology, is what unites them.

The numerous types of cryptocurrencies are covered in detail in this article. Of course, the blockchain’s pace is the same for all things cryptocurrency. 

How Many Different Cryptocurrencies Exist?

According to CoinMarketCap, there are roughly 21,910 cryptocurrencies with an estimated $850 billion market valuation. Considering that Bitcoin only started in 2009, that is a sizable population.

Bitcoin and other cryptocurrencies are utilized as investment vehicles. They are viewed as a store of value by many customers. Some, like ETH, are more transactional. Using the more transactional blockchains, developers may create a wide range of transactional tools, services, and communities.

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How Many Different Kinds of Cryptocurrencies Exist?

There are currently thousands of cryptocurrencies, and a significant number are being introduced daily. Even while they all rely on the same underlying concept of a consensus-based, decentralized, and irreversible ledger in order to transfer money digitally between trustless parties, there are subtle and not-so-subtle differences between them.

This article will clarify the market and attempt to classify cryptocurrencies into four major categories:

  • Payment cryptocurrency
  • Utility Tokens
  • Stablecoins
  • Central Bank Digital Currencies (CBDC)

Shitcoin is another term for a cryptocurrency with little to no value or a virtual money that has no clear, immediate function.

Payment Cryptocurrency

The first major class of cryptocurrencies is payment-related ones. Bitcoin, perhaps the most well-known cryptocurrency, was the first one to be successfully utilized for contactless payments. As its name implies, a payment cryptocurrency functions as both a method of exchange and electronic cash for peer-to-peer transactions.

Utility Tokens

Beside Payment tokens, the second well-known cryptocurrency to almost all investors is the Utility tokens. These tokens are any digital asset that runs on top of another blockchain. The Ethereum network was the first to propose the notion of opening up its blockchain to other crypto assets.

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Finance Tokens

Binance’s Binance Coin (BNB), which was developed to provide the holder with reduced trading costs, is another illustration of a token. You may occasionally hear this form of token referred to as a “Exchange Token” since it provides access to a cryptocurrency exchange.

Governance Tokens

Fascinatingly, tokens can also be utilized for governance. These tokens provide their owners the ability to share their opinion via voting on certain topics inside a cryptocurrency network. These often involve greater, more important choices or adjustments and are required to preserve the network’s decentralized character. This keeps the power of decision-making from being concentrated in a small group and allows the community to vote on proposals.

Media and Entertainment Tokens

Then there are the Media and Entertainment Tokens, which may be spent for online gaming, content, and entertainment. One such is Basic Attention Token (BAT), which rewards users who choose to see adverts with tokens that can subsequently be used to reward top content producers.

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Non-Fungible Tokens (NFTs)

You might be perplexed as to why a different frequently used idiom wasn’t given. Unquestionably one of the trendiest subjects in the Decentralized Finance (DeFI) industry is Non-Fungible Tokens (NFTs). NFTs, on the other hand, are not a cryptocurrency since one unit of a given coin is the same as the next.

Stablecoins

Because many digital assets are fluctuating, stablecoins are designed to serve as a store of value. Despite having a blockchain foundation, they nevertheless have value since they may be exchanged for one or more fiat currencies. Stablecoins are therefore truly anchored to a real currency, most frequently the US dollar or the Euro.

Central Bank Digital Currencies (CBDC)

Central Bank Digital Currency is type of cryptocurrency issued by the central banks of different nations. CBDCs are issued by central banks in the form of tokens or electronic records linked to the currency and connected to the national currency of the area or nation issuing the CBDC.

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