3. The 11 types of Cryptos

Monday 21st February 2022

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.

Example: Exodus

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).

Example: CryptoKitties

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)