A Beginner Guide to the Different Types of Crypto Coins

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Elena

14/03/2024
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There are many cryptos around the world, and many are still being developed. With about 23,000 cryptos already in circulation, it already takes some doing to keep track.

Turns out there’s a way to categorize these cryptos, and it involves understanding what these different types of cryptocurrencies do, and that’s exactly what this article looks to do.

Here is a breakdown of the top 9 types of digital coins and how they can be used:

1. Meme coins

Meme coins are exactly that: cryptocurrency coins inspired by memes. They were initially designed and launched to parody the rat race that has become synonymous with cryptocurrency until people started to take interest. How meme coins came to be, how they are inspired by everyday memes, and the fact that they do not exist to serve any particular purpose has seen them compared to a cultural phenomenon.

The following are the two most popular meme coins currently in circulation:

●     Dogecoin (DOGE)

This is a dog-themed coin created in 2013 by software engineers Billy Markus and Jackson Palmer. The Dogecoin was inspired by the popular Doge theme meme that featured Kabosu, the Japanese female Shiba Inu dog.

The DOGE coin’s exponential growth has ranked it amongst the ten most valuable blockchain networks and has got the “doge father” in Elon Musk super interested and invested. DOGE coins can be used to purchase a lot of things, which include gold, jewelry, cars, electronics, real estate, food, and clothes, and can even be used to make donations.

●     Shiba Inu (SHIB)

This is another notable dog-themed coin launched in August 2020 that has seen massive growth over the years. Even though it doesn’t have much of a special utility value, it can be used in a variety of stores in the United States for gaming, entertainment, food, clothes, and even home decor.

2. Stablecoins

As the name suggests, it aims to maintain stability, regardless of the conditions of the market, and does this by using various techniques. Some of the most popular stablecoins are the USD Coin (USDC), TrueUSD (TUSD), Paxos Standard (PAX), Gemini Dollar (GUSD), MakerDAO Stablecoin (DAI), STASIS EURS (EURS), Singapore Dollar Rate (SGDR), etc.

There are four main types of stablecoins;

  • Fiat-Collateralized Stablecoins
  • Algorithmic coins
  • Crypto-Collateralized Stablecoins
  • Commodity-Backed Stablecoins

3. Utility tokens

Utility tokens (utility coins) are digital assets that are used to gain access to services on a blockchain protocol. It is typically used to acquire assets and hold them to gain privileges that other asset holders enjoy. Here are a few examples of the most popular utility coins:

  • Binance Coin (BNB)
  • Ether (ETH)
  • Basic Attention Token (BAT)

4. GameFi Crypto

GameFi is one of the most recent blockchain developments, and it plays a major role in shaping the economics of new immersive games. It is typically used as in-game currency that can be exchanged for fiat money or other cryptocurrencies.

Gamers can also use it to purchase or invest in any in-game NFTs, and they can rent, sell, or trade them on the open marketplace as investments to gain interest and returns. Learning how to take advantage of these in-game currencies to turn the most profit is one of the essential steps to becoming a pro gamer.

It is still a relatively new development; as such, there are not many GameFi currencies.  However, the few that exist already play an important role in the gaming space. These include blockchain projects like Axie Infinity (AXS/SLP), The Sandbox (SAND), Splinterlands (SPS/DEC), Decentraland (MANA/LAND), and Alien Worlds (TLM).

These GameFi tokens can also serve as utility tokens to reward players when playing play-to-earn games. Other types of crypto are also being used in gaming more and more. For example, some of the world’s leading coins, like BTC and ETH are used in the gambling industry, with a growing number of players choosing to play at crypto casino sites for the many benefits associated with crypto payments over fiat.

5. Security Tokens

Security tokens are the equivalents to the traditional securities that exist on a blockchain. They act as regulators and can be represented on the blockchain.

The performance of security tokens can be tracked worldwide and are more commonly deployed on Ethereum blockchains that adhere to the ECR-1400 security standards. There are a few examples of blockchain security tokens like SPiCE VC, Sia Funds, Blockchain Capital’s BCap, and Science Ventures.

6. Privacy Coins

A lot of people have the misconception that cryptocurrencies offer complete private transactions. However, this is not entirely true, as it offers pseudo-private transactions where only parts of your information are hidden, and the rest is available to the public.

An example of this would be the Bitcoin network that shares the addresses of the sender and receiver, fees paid, the transaction amount, and the transaction history of the wallet on the internet. Privacy coins, on the other hand, are designed to hide all the details.

The most popular privacy coin is Monero (XMR), where its transactions are so private that only the parties involved can see the transaction amount, and only the wallet owner knows their balances.

Other notable privacy coins are Dash (DASH), Zcash (ZEC), Horizen (ZEN), Decred (DCR), and PIVX (PIVX).

7. Wrapped Tokens

Wrapped tokens are alternate versions of a specific cryptocurrency that allow its value to be moved to another blockchain.

This concept of wrapped tokens was first introduced as a solution for some blockchain interoperability challenges. The most popular wrapped token has to be the Wrapped Bitcoin (WBTC), as it is a token that helps track the value of Bitcoin, so ideally, the price of one WBTC should be equivalent to one BTC.

Other examples of wrapped tokens are renBTC (RENBTC), Wrapped Ether (WETH), renDOGE (RENDOGE), and Wrapped NXM (WNXM).

8. Central Bank-issued Digital Currencies (CBDCs)

CBDCs are digital currencies that were designed and issued by a central government facility as an alternative to fiat currencies. The idea around these types of currencies is to replicate some of the highly desired features of digital assets, such as their low transaction costs, sound security, and speedy transaction times, all while having control of supply and demand.

Here are a few countries that have successfully launched CBDCs:

  • The Bahamas – Sand Dollar
  • Jamaica – JAM-DEX
  • Nigeria – eNaira
  • Eastern Caribbean Union comprising Saint Lucia, Dominica, Grenada, Montserrat, Antigua and Barbuda, St. Vincent, St. Kitts, and Nevis, and the Grenadines – DCash

9. Exchange Tokens

These are cryptocurrencies that are associated with or that are issued by cryptocurrency exchanges. Exchange tokens can either be centralized (CEX) or decentralized (DEX); either way, both have the capability of creating native tokens that can be used to power ecosystems.

The leading crypto exchange tokens serve as staking tokens, trading fee discount claim tokens, launchpad investment access tokens, and governance tokens.

There are a few leading platforms that have exchange tokens, such as;

  • com exchange
  • Uniswap DEX
  • Huobi exchange
  • Binance exchange
  • KuCoin exchange

Crypto coins: A New Beginning

In this list, we discussed the most popular crypto coins.

However, this is by no means a conclusive list, as there are many other coins available. However, the list does provide you with a solid introduction to what the different crypto coins are and how they work.

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