February 29, 2024

What Are the Main Types of Cryptocurrency?

There are currently more than 12,000 different cryptocurrencies in existence.

With so many different types of cryptocurrency available, it can be hard to know what to invest in, or even where to begin. Advancements in blockchain technology have made it possible to purchase all different types, but it’s important to know what’s available to help you make the right choices.

For a rundown of some of the main types of cryptocurrency available, keep reading.

Coins vs Tokens

Cryptocurrency technology is essentially split into two categories. A “coin” is a cryptocurrency that runs on its own blockchain such as Bitcoin or Ethereum. Note that any coin other than Bitcoin is often called an “altcoin”.

A “token” is an asset that uses the infrastructure of another blockchain. Tether, for example, is a token that uses the Ethereum blockchain, and there are many others.

Types of Cryptocurrency

One of the benefits of investing in crypto is that you can easily diversify your portfolio. You want to store these in a cryptocurrency software wallet or hardware wallet to keep them secure – just note that you need to use a wallet that supports whatever crypto you’re investing in.

Bitcoin (BTC)

As the first cryptocurrency in the world, Bitcoin has become incredibly popular and has a cap of 21 million coins. It already has various use cases as many companies accept it as a form of payment. Bitcoin ATMs are even becoming quite popular, allowing people to withdraw Bitcoin as cash.

Ethereum (ETH)

This runs on its own blockchain like Bitcoin, but unlike Bitcoin, Ethereum has no cap. It supports smart contracts, and many tokens have been built on the Ethereum blockchain such as UniSwap and Chainlink.

Binance Coin (BNB)

BNB is native to Binance, the world’s largest crypto exchange. Users experience smaller transaction fees on the platform, and Binance routinely “burns” a percentage of coins to keep the value stable.

Tether (USDT)

Tether is a stablecoin that’s pegged to the US dollar, which means it protects from the volatility that othercryptocurrencies experience. There are multiple stablecoins available, with Tether being the most popular.

XRP (XRP)

XRP is specifically designed to meet the needs of the financial services industry. Its purpose is to provide fast, inexpensive global transfers between different currencies. You can learn more about how it compares to Bitcoin at Byte Federal.

Cardano (ADA)

The Cardano blockchain is split into two layers which helps to provide better transaction speeds. It’s considered a “third generation” crypto and is intended to improve the experience of anyone holding the coin.

Dogecoin (DOGE)

Dogecoin is a “meme coin”, originally made as a joke. Due to a huge surge in popularity, however, over time it has managed to establish itself as one of the most popular cryptocurrencies in the world.

What Type Is Right for You?

When investing in crypto, you might be overwhelmed by all the different types of cryptocurrency on offer. It’s important to research any coin or token before investing so you know what you’re paying for. It’s also considered a good idea to maintain a diverse portfolio to help keep risk to a minimum.

For more tech articles check out some of our other blog posts.

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