Types of Cryptocurrency Overview, Examples

Types of Cryptocurrency Overview, Examples

In January 2022, Bitcoin was the cryptocurrency with the largest market cap, at US$896 billion. Cryptocurrencies like Ethereum make it possible for anyone to create a smart contract and deploy it to the network for anyone to access. Another approach to defining the types of cryptocurrencies is to categorize them according to their use cases. For example, some coins are primarily designed to facilitate payments, while others are used for more complex use cases like smart contracts and decentralized applications. Once an investor has purchased a crypto, it can be held in account and used to verify transactions occurring on the blockchain network.

A coin with a much larger market cap than its peers has the potential to be a more stable investment than one with a much smaller market cap. Digital currencies with smaller market caps are more susceptible to the whims of the market; they have the potential to experience dramatic gains or losses. Below is a list of the 20 biggest cryptocurrencies arranged by market capitalization (market cap) — highest first — according to CoinMarketCap on Jun 25, 2022. Bitcoin (BTC) is the clear leader in the cryptocurrency sector, with a market capitalization of $407,387,696,36, followed by Ethereum (ETH), at $149,402,716,985. However, so far there is no standard way of classifying cryptocurrencies, only generally acceptable groups of assets.

Type of cryptocurrency compared

This guide to 20 different types of cryptocurrency offers a grounding in today’s largest cryptocurrencies, including how and why they differ from each other. We hope it would help you decide how best to invest in crypto, according to your own investment style and tolerance for risk. There are currently several types of wrapped cryptocurrencies, including a handful of stablecoins like Tether (USDT) and Coinbase’s United States Dollar Coin (USDC).

Uniswap was one of the first DEXs to create an automated liquidity protocol to facilitate trades. Unlike well-established, centralized crypto exchanges (CEX) like Binance or Coinbase, the Uniswap protocol uses smart contracts to facilitate trading of ERC-20 tokens, acting as an AMM. BNB was created with a maximum of 200 million tokens, about half of which were made available to investors during its ICO. Every quarter, to drive demand, Binance buys back and then “burns” — permanently destroys, or removes from circulation — some of the coins it holds.

Privacy coins

Originally created as a joke after the run-up in Bitcoin, Dogecoin takes its name from an internet meme featuring a Shiba Inu dog. Unlike many digital currencies limiting the number of coins in existence, Dogecoin has unlimited issuance. The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice. Bankrate does not offer advisory or brokerage services, nor does it provide individualized recommendations or personalized investment advice. Investment decisions should be based on an evaluation of your own personal financial situation, needs, risk tolerance and investment objectives. Investing involves risk including the potential loss of principal.

In fact, several such currencies were created in the 1980s and 1990s. ERC-20 is the technical standard for fungible tokens created using the Ethereum blockchain, It sets the rules developers must follow for a token to work on Ethereum’s platform. If you’re interested in learning types of cryptocurrency exchanges more about how cryptocurrencies are created, check out our guide on new cryptocurrencies. Bitcoin and altcoins like Ethereum that run on their own blockchain are considered coins. When most people think of cryptocurrency, they probably think of crypto coins like Bitcoin.

Learn first. Trade CFDs with virtual money.

The issuance of the currency, called SOL, is capped at 480 million coins. Like Tether, USD Coin is a stablecoin pegged to the dollar, meaning that its value should not fluctuate. The currency’s founders say that it’s backed by fully reserved assets or those with “equivalent fair value” and those assets are held in accounts with regulated U.S. institutions.

Litecoin was designed to enable almost instant, near-zero cost payments that can be exchanged between people or institutions worldwide. Litecoin (LTC) is a cryptocurrency created in 2011 as one of the first altcoins (alternatives to bitcoin). Though it’s built on bitcoin’s original source code and shares certain features with BTC, LTC was designed to improve upon BTC, especially in terms of transaction speed. Tether was the first cryptocurrency marketed as a stablecoin — a breed of crypto known as fiat-collateralized stablecoins.

Types of Cryptocurrency Explained Definition & Examples

SOL is the native coin of the Solana platform, which functions on a blockchain system, just like Ethereum and Bitcoin. Solana’s network can perform a whopping 50,000 transactions per second,  making this platform especially attractive to investors looking to trade quickly. There are thousands of cryptocurrencies—but they’re not all the same.

• The ability to create content and share it openly without hesitation regarding transaction fees is an advantage of TRON.
• Like Bitcoin, some cryptocurrencies have a limited supply of coins — which helps create demand and reinforce their perceived value.
• Prices rise to new heights and plunge in value rapidly and frequently.
• Doing your own research about each of these coins is important to understand how the crypto world functions.
• They can also represent digital art — as with non-fungible tokens (NFTs).

In such cryptocurrencies, users can verify that transactions on the network are legitimate and follow the protocol’s rules. However, the details about each transaction https://www.xcritical.com/ are hidden from the public. Like Bitcoin, all altcoins are able to operate independently on their own networks utilising distributed ledger technology (DLT).

Explained: Different Types Of Cryptocurrencies

Despite the cause of their origin, some meme coins have gone on to become notable cryptocurrencies in terms of how large they’ve grown in market value. Payment-type cryptocurrencies are, as the name alludes, crypto assets used to make payments for various goods and services. In essence, all assets can be used as a form of value transfer, but few can be used as money.

Prices rise to new heights and plunge in value rapidly and frequently. Big price swings create both opportunities and risk for investors. When you want to say how much fiat currency you have in your pocket, you say you have 20 pesos or 30 euros.

Tether

When covering investment and personal finance stories, we aim to inform our readers rather than recommend specific financial product or asset classes. Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice. Developers can launch a crypto token to build on top of an existing blockchain’s features and popularity. Learn how they also can focus on creating, promoting, and updating it. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Crypto Coins vs. Crypto Tokens

IOTA, or Internet of Things Application, doesn’t actually work with a block and chain; it works with smart devices on the Internet of Things (IoT). This enables the communication between various objects with sensors, via the internet. IOTA focuses on making this technology more secure, seamless, and scalable. Read about what you need to set up a crypto wallet to store your currency, and visit our blog to learn more about all things crypto. The world of crypto has exploded since the advent of Bitcoin a decade and a half ago.

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