Cryptocurrencies have become increasingly popular in recent years, with Bitcoin being the most well-known of them all. But what other types exist? In this article, we'll explore the various types of cryptocurrencies, from mining-based coins to stablecoins and security tokens. We'll also discuss how cryptocurrencies differ, the ways in which they are used, and provide examples of each type.The term 'altcoin' is used to refer to all cryptocurrencies other than Bitcoin. Some of the major types of alternative currencies include mining-based coins, stablecoins, security tokens, and utility tokens.
Popular and well-known payment currencies include Bitcoin (BTC), Litecoin (LTC), Bitcoin Cash (BCH), and others.We can identify at least four types of cryptocurrencies based on how they are formulated or on the design of the code, the application or the use case and other factors. Of all the types of cryptocurrencies, Bitcoin has seen the most explosive growth, but in terms of ROI, it hasn't yet surpassed Shiba Inu, Ethereum, Dogecoin and Shushi.
Mining-Based CryptocurrenciesMining-based cryptocurrencies are powered by a blockchain network known as proof of participation. The owner of the cryptocurrency can obtain a kind of dividend by staking their holdings, which are normally paid in additional coins or tokens. Bitcoin was the first operational public cryptocurrency that used this method.
StablecoinsStablecoins are a type of cryptocurrency that is designed to maintain a stable value relative to a fiat currency such as the US dollar.
Examples include Tether (USDT) and Coinbase's USDC coin. Stablecoins can be used as a type of currency but also provide tokens that can be used to pay fees on exchanges.
Security TokensSecurity tokens are digital assets that represent an investment contract between a company and an investor. They are typically issued through an Initial Coin Offering (ICO) or Security Token Offering (STO). Security tokens are subject to federal securities laws and regulations.
Utility TokensUtility tokens are digital assets that provide users with access to a product or service.
Utility tokens can be used to purchase goods or services from the issuing company.The fear of missing out (FOMO) factor could be another reason why there are so many types of cryptocurrencies. The term altcoins is also a common reference to cryptocurrencies of all types, except Bitcoin, since they are considered an alternative to Bitcoin.Cryptocurrencies can serve many purposes beyond that of currency. Binance Coin is one example; it can be used as a type of currency but also provides tokens that can be used to pay fees on the Binance exchange and to boost the Binance DEX (decentralized exchange) to create applications.So what is it about this cryptocurrency project and its associated token, MATIC, that differentiates it from other types of cryptocurrency?.