3. The 11 types of Cryptos
There are 9000+ Cryptos being actively traded in 450+ exchanges across 50,000+ market pairs. Based on my analysis, Cryptos can be divided into 11 categories:
There are 9000+ Cryptos being actively traded in 450+ exchanges across 50,000+ market pairs.
Based on my analysis, Cryptos can be divided into 11 categories:
1. Ready money
Ready money cryptos are those that can be used to buy and sell stuff or which can be quickly converted to “cash”.
Examples: Bitcoin (BTC), Bitcoin Cash (BCH), Litecoin (LTC), and fiat-pegged stablecoins such as Tether (USDT).
2. Open Blockchain Tokens
An Open Blockchain Token (OBT) is a unique form of crypto recognized under the laws of Wyoming, US. An OBT must be exchangeable for specified consumptive purposes services e.g. software, content, or real/tangible personal property.
Example: Wrapped Asset Token (WRAP)
3. Hush coins
Did you know that Bitcoin isn’t 100% anonymous? All its transactions are recorded on its publicly available Blockchain. That’s what led to the birth of hush coins or privacy coins - some of which are private by default, while others let the users decide if they want to activate the functionality or not.
Example: Monero (XMR)
4. Application coins
Application coins are those which are part of a specific use case. Example: Filecoin (FIL) is the native crypto of the Filecoin network. It can be used to pay miners to store/distribute data and to retrieve information. Storage providers guarantee a minimum service level by providing FIL as collateral.
5. Security tokens
Security tokens are like equity shares and represent ownership of a company.
6. Non-Fungible Tokens (NFTs)
Non-Fungible Tokens (NFT) are the crypto versions of things like art and real estate. They are used as digital proof-of-ownership of the underlying asset. NFTs can be of many types, including art, collectibles (trading cards, sneakers), domains, virtual game items (avatars, skins, weapons, etc).
7. Algorithmic stablecoins
Algorithmic stablecoins are cryptos whose price stability is maintained by an algorithm. They are different from fiat-pegged stablecoins whose stability is maintained by the fiat currency they are pegged to.
Example: Frax (FRAX)
8. Governance tokens
Governance tokens give holders a vote in a project’s development.
Example: Uniswap (UNI)
9. Public Blockchain natives
Using a public blockchain involves the payment of gas fees or transaction fees. This fee is payable in the native Crypto of that blockchain.
Example: Ether (ETH)
10. Asset-backed tokens
An asset-backed token or a Wrapped Asset is a blockchain token pegged to or collateralized by an asset such as art, gold, fiat currency, debt instrument, equity shares, trade invoices, real estate, etc. It’s called a “wrapped” asset or token because the original asset is put in a “wrapper” or “digital vault” that enables the wrapped version to be traded on a blockchain.
Example: Coffee coin
11. Lending / Borrowing cryptos
These tokens make it easy for investors to borrow and lend funds in a Decentralised Finance market.
Example: Aave (AAVE)