3 Unique Classification of Cryptocurrency In [year]

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Classification of Cryptocurrency In [year]: In this article, we are going to understand the classification of Cryptocurrency according to their categories. We also going to know about their brief and their work with their utilities in [year].

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Classification of Cryptocurrency In 2023
Classification of Cryptocurrency In 2023

Classification of Cryptocurrency In [year] On The Basis Of Work and Use

Stablecoins: Definition, How They Work, and Types

Definition

Stablecoins are cryptocurrencies whose value is pegged, or tied, to that of another currency, commodity, or financial instrument. Stablecoins aims to provide an alternative to the high volatility of the most popular cryptocurrencies, including Bitcoin (BTC), which has made crypto investments less suitable for common transactions.

Features

  • Stablecoins are cryptocurrencies that attempt to peg their market value to some external reference.
  • Stablecoins are more useful than more-volatile cryptocurrencies as a medium of exchange.
  • Stablecoins may be pegged to a currency like the U.S. dollar or to the price of a commodity such as gold.
  • Stablecoins pursue price stability by maintaining reserve assets as collateral or through algorithmic formulas that are supposed to control supply.
  • Stablecoins continue to come under scrutiny by regulators, given the rapid growth of the $153 billion market and its potential to affect the broader financial system.
Classification of Cryptocurrency In 2023
Classification of Cryptocurrency In 2023

Types Of Stablecoin

Fiat-Collateralized Stablecoins

Fiat-collateralized stablecoins are, as the name suggests, backed by sovereign currencies such as the pound or the US dollar. It means that to issue a certain number of tokens of a given cryptocurrency, the issuer must offer dollar reserves worth the same amount as collateral.

Crypto-Collateralized Stablecoins

Crypto-collateralized stablecoins are backed by other cryptocurrencies. Because the reserve cryptocurrency may also be prone to high volatility, such stablecoins are overcollateralized—that is, the value of cryptocurrency held in reserves exceeds the value of the stablecoins issued.

Algorithmic Stablecoins

An algorithm can be an obfuscating word. But it simply means a set of codes that instructs a process. So, for example, what you get to see on your Facebook timeline is determined by Facebook’s timeline algorithms, which include things like how relevant the post is to you based on your past online behavior.

Classification of Cryptocurrency In 2023
Classification of Cryptocurrency In 2023

In crypto, an algorithm refers to pieces of code on the blockchain, as encoded in a set of smart contracts. Algorithmic stablecoins typically rely on two tokens – one stablecoin and another cryptocurrency that backs the stablecoins – and so the algorithm regulates the relationship between the two.

Some Cryptocurrencies with their Price and Market Cap in [year]

NameShort Name Price(USD)Market CapType
BitcoinBTC$18,213.70$351.08 BToken
EthereumETH$1,402.56$171.68 BToken
TetherUSDT$1.00$66.27 BStablecoin
BNBBNB$244.54$39.73 BCoin
USD CoinUSDC$1.00$43.92BStablecoin
XRPXRP$0.37$18.96 BCoin
Binance USDBUSD$1.00$16.4 BStablecoin
CardanoADA$0.3296$11.21 BToken
DogecoinDOGE$0.08019$10.49 BAltcoin, Meme Coin
PolygonMATIC$0.8986$7.73 BToken
Classification of Cryptocurrency In 2023
Classification of Cryptocurrency In 2023

Crypto Tokens: Definition, How They Work, and Types

Definition

The term crypto token refers to a special virtual currency token or how cryptocurrencies are denominated. These tokens represent fungible and tradable assets or utilities that reside on their own blockchains. Crypto tokens are often used to fundraise for crowd sales, but they can also serve as a substitute for other things.

Features

  • Crypto tokens are a type of cryptocurrency that represents an asset or specific use and reside on their own blockchain.
  • Tokens can be used for investment purposes, to store value, or to make purchases.
  • Cryptocurrencies are digital currencies used to facilitate transactions (making and receiving payments) along the blockchain.
  • Altcoins and crypto tokens are types of cryptocurrencies with different functions.
  • Created through an initial coin offering, crypto tokens are often used to raise funds for crowd sales.

Types

Classification of Cryptocurrency In 2023
Classification of Cryptocurrency In 2023

Platform tokens

Platform tokens utilize blockchain infrastructures to deliver decentralized applications (dapps) for different uses.

Platform tokens benefit from the blockchains they build upon, gaining enhanced security and the ability to support transactional activity. Platform tokens run the gamut of use cases, from serving gaming and digital collectibles platforms to global advertising and marketplace industries.

Security tokens

The term “security token” emerged as a result of rising regulatory concerns. Regulatory authorities, such as the U.S. Securities and Exchange Commission, sought to specify cryptocurrencies using terminology that didn’t wrestle with existing legal definitions.

Security tokens can represent property interests. Security is an instrument issued by a company, trust, government, or other legal entity that memorializes an ownership interest and provides evidence of a debt, a right to a share of earnings, a right in property distribution, or other similar legal rights. Types of securities include, among others, bonds, debentures, notes, options, shares, and warrants, and may be traded amongst investors or otherwise freely transferable.

Classification of Cryptocurrency In 2023
A pastel-toned, multi-colored image of the two-toned generic coin with a Bitcoin symbol, arranged in a row, or chain along a curve against a multi-colored background. Denotes the concept of blockchain and cryptocurrency. With lots of copy space.

Transactional tokens

Transactional tokens are used to transact—they serve as units of account and are exchanged for goods and services. These tokens often function like traditional currencies, but in some cases, provide additional benefits. For example, with decentralized cryptocurrencies, such as Bitcoin and Dai, it is possible for users to execute transactions without a traditional intermediary or central authority, such as a bank or payment gateway.

Utility tokens

Utility tokens are integrated into an existing protocol on the blockchain and used to access the services of that protocol. They are not created for direct investment like security tokens but can be used for payment of services within their specific ecosystems. The relationship between a platform and a utility token is synergistic, as the platform provides security for the utility token while the token provides the network activity necessary to strengthen the platform’s economy.

Governance tokens

As decentralized protocols continue to proliferate and evolve, the need to refine the decision-making processes around them is critical. On-chain governance allows all stakeholders to collaborate, debate, and vote on how to manage a system. Governance tokens fuel blockchain-based voting systems, as they are often used to signal support for proposed changes and to vote on new proposals. In the Maker Protocol, the governance token is MKR.

Classification of Cryptocurrency In 2023
Classification of Cryptocurrency In 2023

Some Cryptocurrencies with their Price and Market Cap in [year]

NameShort NamePrice(USD)Market CapType
LitecoinLTC$85.15$6.04 BCoin
SolanaSOL$17.05$6.02 BToken
PolkadotDOT$5.24$5.92 BToken
DaiDAI$1.01$5.79 BToken (originally), Now a Coin
TRONTRX$0.05605$5.15 BToken
SHIBA INUSHIB$0.000009464$5.08 BAltcoin, Meme Coin
AvalancheAVAX$15.65$4.79 BToken
UniswapUNI$6.11$4.57 BToken
CosmosATOM$12.12$3.39 BToken
UNUS SED LEOLEO$3.46$3.3 BToken
Classification of Cryptocurrency In 2023
Classification of Cryptocurrency In 2023

Crypto Coin: Definition, How They Work, and Types

Definition

A coin is a cryptocurrency that is native to the blockchain it runs on. A prime example of a coin is Bitcoin or BTC. It is powered by its own blockchain with the same name and is used to pay transaction fees on the network.

Many blockchains are created from scratch as alternative or improved versions of Bitcoin and other existing public ledgers. Creating a blockchain is also possible with a pre-built open-source blockchain, but it still requires time and a certain level of expertise. Because you can not create a coin without building a blockchain, that means it is not easy to launch a coin.

Features

  • Coins operate on their own independent blockchain.
  • Coins can function as money.
  • All crypto coins without exceptions run on their own blockchains.
  • While coins and crypto tokens are largely the same from a common user’s standpoint, there are technical differences in how they are built.
Classification of Cryptocurrency In 2023
Classification of Cryptocurrency In 2023

Some Cryptocurrencies with their Price and Market Cap in [year]

NameShort NamePrice(USD)Market CapType
ChainlinkLINK$6.42$3.21 BToken
MoneroXMR$168.67$3.07 BToken
Ethereum ClassicETC$21.01$2.85 BOpen-Source
ToncoinTONCOIN$2.19$2.67 BToken
StellarXLM$0.08291$2.12 BStablecoin
Bitcoin CashBCH$112.76$2.12 BToken
ApeCoinAPE$4.94$1.75 BToken
OKBOKB$28.59$1.71 BToken
CronosCRO$0.06584$1.64 BToken
AlgorandALGO$0.2138$1.51 BStablecoin
Classification of Cryptocurrency In 2023
Classification of Cryptocurrency In 2023

Crypto coins vs. tokens

Definition

First things first: Know the difference between a coin and a token. When discussing cryptos, you may hear the terms “coin” and “token” frequently used. Although they may sound like interchangeable terms, there is a difference. It’s important to keep them straight.

Coin

A digital coin is created on its own blockchain and acts in much the same way as traditional money. It can be used to store value and as a means of exchange between two parties doing business with each other. Examples of coins include Bitcoin and Litecoin.

Classification of Cryptocurrency In 2023
Classification of Cryptocurrency In 2023

Token

Tokens, on the other hand, have far more uses than just digital money. Tokens are created on top of an existing blockchain and can be used as part of a software application. They can represent digital art. There have even been experimentation using NFTs with physical assets, such as real-life art and real estate. Ether is an example of a token, which is used to make transactions on the Ethereum network. 

Some Cryptocurrencies with their Price and Market Cap in [year]

NameShort NamePrice(USD)Market CapType
Lido DAO TokenLDO$1.87$1.51 BToken
NEAR ProtocolNEAR$1.81$1.5 BToken
QuantQNT$125.44$1.48 BStablecoin
VeChainVET$0.01975$1.36 BStablecoin
FilecoinFIL$3.87$1.36 BStablecoin
Internet ComputerICP$4.45$1.23 BToken
HederaHBAR$0.04899$1.18 BStablecoin
EOSEOS$0.9871$1.05 BStablecoin
FraxFRAX$1.00$1.02 BStablecoin
Luna ClassicLUNC$0.0001834$999.81 MStablecoin
Classification of Cryptocurrency In 2023
Classification of Cryptocurrency In 2023

Difference Between Coin And Token

CoinsTokens
1.Built into a blockchain (native to its own blockchain technology)Built on top of an existing blockchain
2.Requires significant resources and skills to createRelatively easy to create
3.Mostly distributed through miningMostly distributed through ICOs
4.Used to store transfer moneyValid with one merchant
5.Valid with any merchant who uses the currencyVariety of uses (security assets and representation)

Some Cryptocurrencies with their Price and Market Cap in [year]

NameShort NamePrice(USD)Market CapType
AaveAAVE$67.99$940.92 MToken
BitDAOBIT$0.4535$950.48 MToken
Pax DollarUSDP$1.00$878.1 MStablecoin
ElrondEGLD$36.95$872.16 MStablecoin
FlowFLOW$0.8542$867.18 MStablecoin
TrueUSDTUSD$1.01$845.77 MStablecoin
Theta NetworkTHETA$0.8594$840.11 MToken
ChilizCHZ$0.125$812.43 MToken
Huobi TokenHT$5.08 USD$817 MToken
Bitcoin SVBSV$41.50$797.76 MToken
Classification of Cryptocurrency In 2023
Classification of Cryptocurrency In 2023

Crypto Tokens vs. Cryptocurrencies vs. Altcoins

The term crypto token is often erroneously used interchangeably with the words cryptocurrency and altcoins in the virtual currency world. But these terms are distinct from one another.

A cryptocurrency is a standard currency used for making or receiving payments on a blockchain, with the most popular cryptocurrency being Bitcoin. Cryptocurrency is the superset, while altcoins (and crypto tokens) are two subset categories.

Altcoins are alternative cryptocurrencies that were launched after the massive success achieved by Bitcoin. The term means alternative coins—that is—other than bitcoins. They were launched as enhanced Bitcoin substitutes that have claimed to overcome some of Bitcoin’s pain points. Litecoin, Bitcoin Cash, Namecoin, and Dogecoin are common examples of altcoins. Though each has tasted varying levels of success, none have managed to gain popularity akin to Bitcoin’s.

Check Also: What And How Blockchain Is Detailed?

Frequently Asked Questions (FAQs)

What Is the Purpose of Stablecoin?

Stablecoins aims to provide an alternative to the high volatility of popular cryptocurrencies, including Bitcoin (BTC), which can make cryptocurrency less suitable for common transactions.

How Does Stablecoin Work?

Stablecoins attempt to peg their market value to some external reference, usually a fiat currency. They are more useful than more-volatile cryptocurrencies as a medium of exchange.

Which Is the Best Stablecoin?

The most popular and largest stablecoin by market capitalization is Tether (USDT). It is pegged to the U.S. dollar at a 1:1 ratio and backed by gold reserves. It’s also consistently in the top five cryptocurrencies by market cap.

What Is a Crypto Token?

A crypto token is a virtual currency token or a denomination of a cryptocurrency. It represents a tradable asset or utility that resides on its own blockchain and allows the holder to use it for investment or economic purposes.

What Is the Purpose of Tokens?

Crypto tokens can represent an investor’s stake in the company or they can serve an economic purpose, just like legal tender.

Is Bitcoin a Token or a Coin?

Bitcoin is a cryptocurrency, which has virtual tokens or coins that can be used to trade or make purchases.

What Is the Difference Between a Crypto Coin and a Crypto Token?

Crypto coins allow individuals to make payments using their digital currency. People can use tokens, though, for many more reasons. They can use them for trading, to hold as a store of value, and of course, to use as a form of currency.

What Are Some of the Different Types of Tokens That Reside on Blockchains?

Tokens that reside on blockchains include reward tokens, currency tokens, utility tokens, security tokens, and asset tokens.

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