Types of Cryptocurrency
Cryptocurrency might seem like a very complicated topic. Most people have quite a vague knowledge about it. You should know that cryptos are a means of financial exchange.
However, cryptocurrency is so much more than just a mean of exchange.
First, the cryptocurrencies can act like real money—in a sense, they are real money —but they take the virtual form. Investing in cryptocurrency is not easy. It is crucial to understand the difference between all types of cryptocurrencies.
We’ll try to explain all the details concerning cryptocurrency. Here is everything you need to about all the categories of cryptocurrencies.
After reading this, you should have a good understanding of all the significant types of crypto and be able to differentiate between them easily. You’ll learn how to evaluate crypto’s investment opportunities and their trading potential.
Tokens
Tokens are created and given out through an Initial Coin Offering, also known as ICO.
Usually, ICOs provide investors with access to the services or products covered by the symbol. There are three types of tokens: value tokens BTS, utility tokens, and security tokens.
However, tokens do not function as a currency. Instead, they offer access to stock or products. They represent value, and they cover several meanings, which specifically
refer to the long lines of letters representing the crypto used in a transaction.
Utility Token
These types of tokens offer traders access to certain services or products, such as a discounted rate and early or exclusive access. Moreover, they are used for a blockchain-based product or service. Utility Token is a part of a Blockchain Economy. Also, utility tokens are mostly associated with smart contracts and decentralized apps.
Examples of Utility Tokens include Golem (GNT), Civic (CVC), OmiseGo (OMG), Basic Attention Token (BAT), and 0x (ZRX).
Security Tokens
These types of coins are digital securities. Security tokens possess a real-world asset that exists outside the blockchain. Most of these tokens are strictly regulated. Also, security tokens are governed by the appropriate government agency. Moreover, some of the security token platforms ask their users for verification, before allowing them to trade.
Coins
The main difference between the coin and token is the presence of a blockchain. Most of the Cryptocurrencies you’ll find on the market are coins. Currency coins usually perform just like a standard currency. In addition, you can purchase different services and goods, with virtual coins. The most popular coins are Bitcoin, Ethereum, and Litecoin.
Privacy Coins
In Privacy Coin transactions, all the information is a secret. Only the sender and receiver know the number of coins transacted and other contract specifics. Also, privacy coins are cryptocurrencies that focus on privacy. Besides, organizations or individuals do not monitor the transactions of Privacy Coins.
Stablecoins
These assets are viral among regular traders. They are stable in price, and their values do not change as quickly as other digital assets do.
Stablecoins are cryptocurrencies with values like standard currencies or precious metals. Stablecoins are very attractive to investors. The reason is, if a trader thinks that an asset is going to lose value soon, they can sell the asset for a stablecoin to prevent any kind of financial loss.
However, different stablecoins follow different methods to maintain a stable price.
As an investor, you must do your research if you plan to buy and trade. Besides, it is especially important as the market is incredibly volatile. Start investing if you are comfortable with the knowledge you have gathered.
We hope you now have a better idea of the different types of cryptocurrencies and have fun trading!
