With the arrival of Bitcoin, the stage was set for more types of cryptocurrency. Since then, hundreds of types have been added. It would go too far to cover them all here, so in this lesson we have chosen to single out the most important ones.
✔️ Stablecoins are digital coins with a stable value, such as USDC, Thether and Binance USD.
✔️ Technology coins are used for technology applications, such as Ethereum and Cardano.
✔️ DeFi coins are used on decentralized networks for funding.
✔️ Governance tokens allow you to vote on the future of a project.
✔️ Exchange coins or native tokens, are coins that belong to a cryptocurrency exchange such as UniSwap.
✔️ Store or value coins, are cryptocurrencies that are expected to become more valuable. An example of this is Bitcoin.
✔️ Game coins, with this coin you can buy items in games.
✔️ Fan tokens allow you to buy fanware from your favorite club. They also allow you to decide on the future of the club.
✔️ Privacy coins are cryptocurrencies that focus on privacy and anonymity of the users, an example of this coin is Monero.
✔️ Shitcoins have no values and are often launched as a joke.
Cryptocurrency comes in many varieties. Each cryptocurrency is created with a purpose, although there are some coins that are just a joke. Let's list them:
Exchange coins or native tokens.
Store of value coins.
Digital cash tokens.
There can be more invented or pointed out in the future, but most cryptocurrencies will fall under this terminology. We will review them one by one.
These coins have a stable value. Sometimes the price can still fluctuate because of errors in a smart contract or a loss of confidence in the coverage. Generally, this happens very little. Well-known coins are USDC, Tether and Binance USD. These coins are always worth exactly $1 if all goes well. Similarly, there is a stablecoin for the euro. There are also stablecoins that are based on a complicated algorithm. With this kind there is the greatest chance of fluctuations, as we have seen with Terra Luna.
These types of coins allow you to do all sorts of technological things, such as closing smart contracts or building apps, using the cryptocurrency to pay fees. The best known in this area is Ethereum, but there are a large number of these types of coins. These include Cardano, which also works with smart contracts, as well as The Graph, which provides graphs for all kinds of networks. There are too many to mention. Consequently, there are 13,000 coins to admire on CoinGecko. This is the most common type of coin.
Defi coins are coins that belong to a decentralized network, where financing is the main issue. On all kinds of platforms you can borrow, lend and stake money. You can also do all kinds of other financial things there, such as insurance or trading. With these kinds of coins, you don't need a credit check from the BKR. So anyone can join, if you meet the conditions in a smart contract. The fact that it is decentralized means there is no organization that can refuse or admit you, everything is automatic.
These types of tokens allow you to vote on the future of a project. Often you can also make proposals yourself, after which everyone who has governance tokens will vote on your proposal or that of others, such as the developers of a project. The purpose of governance tokens is to give the community a voice in the future of the project.
An exchange coin is a coin that belongs to an exchange. Most readers will be familiar with BNB. This is the coin that belongs to Binance, the Binance Coin. It is also called the native token because it is the coin of the home exchange. With a native token, you can often do all kinds of things on the exchange that issues it, such as pay for fees and get discounts and get interest and discounts when you stake it. At each exchange, you get different benefits if you hold the exchange coin. Decentralized exchanges also have a native token, such as PancakeSwap or UniSwap.
These are coins that will become increasingly valuable, according to expectations. There will still be high volatility, but over time the value of the coin will keep rising with peaks and valleys. The best-known example of this is Bitcoin.
The DeFi hype was followed by game coin hype. Coins like Mana, Axie Infinity, TheSandbox and Enjin Coin went sky-high. With such a coin, you can buy all kinds of things within the game. For example, with Axie Infinity you can buy creatures that fight each other and with Mana you can buy all kinds of things like land and accessories for your avatar.
These are coins that you buy if you are a supporter of a big club, for example. Many major soccer clubs market such a coin and if you use it to buy fanware from the club, such as scarves or clothing with the club name on it, you can get a discount. Usually you can also use them to buy tickets, sometimes giving you priority if you pay with a fan token. Well-known fan tokens are those of Barcelona or Paris St. Germain. Another function that such a token can have is governance, that is, that you get to help decide the future of the club, perhaps whether they should sign a particular player. Fan tokens are a kind of VIP cards, giving you all kinds of benefits. This should strengthen the bond between club and fans.
These are coins intended to be used to make digital payments. Well-known examples are DASH, Litecoin and Bitcoin Cash.
These are cryptocurrencies that are mainly concerned with keeping your identity hidden when trading this coin. Well-known and infamous is Monero. Known for its well-protected privacy, infamous with governments for suspicion of money laundering through Monero. Other well-known coins are Zcash and Secret.
These are coins that have no function at all. They are often launched as a joke or meme. They are also often called meme coins. For example, you have well-known coins like Dogecoin and Shiba Inu. Both coins have a picture, a meme, of a dog as a symbol. A lot of shitcoins are launched, almost all of which go down without glory. Many of these coins are brought to $0 by the creators themselves through a back pull. Here the maker sells all his coins at market price, so that within a minute all orders are fulfilled and the coin is worth nothing, because even at the lowest offer was bought. After that, confidence is gone and the coin disappears from the market.