In today’s competitive world, the concept of cryptocurrency investment is driving the financial investors to invest in cryptocurrencies, especially bitalpha ai io. The growing applicability of cryptocurrencies across different domains is also a key reason people are now interested in adding crypto assets to their investment portfolios.
Although our knowledge about cryptocurrency usually remains limited to the fact that there are only bitcoin, Ethereum, and other cryptocurrencies in the market. But there are many layers to it. There are different types of cryptocurrency; hence, before investment, it is important for an investor to 1st understand the different types of cryptocurrencies and their significant attributes that play a significant role in defining your return on investment.
- Coins and Tokens
Start exploring the crypto world the first thing you will come across is crypto coins and crypto tokens. Both these terms whole different significance. Hence, before investing, it is important to understand this broad classification of cryptocurrency and the two domains: coins and tokens.
- Coin– The digital coin works in Blockchain, and its functioning is almost identical to traditional monetary transactions. Two most common examples are bitcoin and Litecoin.
- Tokens– Their role is more than just digital money. These are created and used as a part of software applications. For example, you may need it to grant access to an app or verify your identity. One of the most common examples is non-fungible tokens, or NFT, representing a form of artwork.
The Different Types of Cryptocurrencies You Should Know About
- Utility Tokens– These work like coupons or vouchers. They have a certain value associated with them on the Blockchain. The holder of the utility token gets access to utilize the service or buy a product of a similar value. You can compare it to the gaming tokens given in the gaming zones. These tokens are for the value of a certain value in the particular gaming zone and give you access to play the games based on the token’s value. Kilifi tokens, on the other hand, operate in the blockchain ecosystem.
Funfair, Basic Attention Token
- Payment Tokens-One of the most common type of crypto tokens. As you can figure out from the name, payment tokens are usually used for buying and selling goods or purchasing services. Using this payment token, one can easily transact without depending on a central platform or central authorities.
- Exchange Tokens-These are specific to a particular crypto exchange. It is unique and initially, the tokens could only be purchased from a particular exchange, but now these tokens are available on different crypto exchanges. You can use these tokens for buying, selling, and swapping tokens. You can also use these tokens between different exchanges. One of the unique features is that it can be used outside the native crypto exchange system.
Binance Coin, Gemini USD, OKB for Okex exchange
- Non-fungible Tokens– It is an asset associated with any artwork. It is a certificate of ownership that is unique. This can represent any form of art, photograph, video, music, collectibles, virtual worlds, GIFs, fashion, music, paintings, and others. NFTs came into the market in 2015. They are known to bepowered by Ethereum Blockchain. The digital signature is also unique and it cannot be exchanged with others. In simple words, each NFT is unique to a particular artwork, and can not be used to represent other forms.
- DeFi Tokens-Decentralized finance is the apps developed on Blockchain. These apps are accessible to anyone who has internet connectivity. A token, its native cryptocurrency, power each decentralized finance application.
- Stablecoins – The next common type of cryptocurrency is a stablecoin. These coins are much more stable in terms of their value than cryptocurrencies. When it comes to stablecoins, they, too, are prone to the volatility of cryptocurrencies. Since the value of a stablecoin is associated with Fiat currency or real-world acid, there is lesser price activation as compared to the cryptocurrencies.
Tether, Gemini Dollar, Paxos
So, these were some of the different types of cryptocurrencies presently circulating in the market. You should pick the one after thorough research. However, you must also register yourself on a safe trading platform bitql app. s