{"id":18491,"date":"2022-07-12T05:12:51","date_gmt":"2022-07-11T23:42:51","guid":{"rendered":"https:\/\/coinswitch.co\/switch\/?p=18491"},"modified":"2023-10-05T17:27:06","modified_gmt":"2023-10-05T11:57:06","slug":"what-are-different-types-of-cryptocurrencies","status":"publish","type":"post","link":"https:\/\/coinswitch.co\/switch\/crypto\/what-are-different-types-of-cryptocurrencies\/","title":{"rendered":"Different Types of cryptocurrencies"},"content":{"rendered":"\n

Currently, more than 18,000 types of cryptocurrencies are in circulation in the market. The underlying blockchain technology<\/a> helps generate different cryptocurrencies for diverse functionalities. In fact, cryptocurrencies are broadly classified based on three parameters\u2014the way they are made, the way they are extracted, and their use case (exchange, Defi, or NFT).<\/p>\n\n\n\n

Talking about types of cryptocurrencies, a non-fungible token (NFT)<\/a> is a unique digital asset that showcases possession of real-world items such as art, video clips, and music. Although they are not considered currencies, NFTs use the same blockchain technology that powers cryptocurrencies. Interestingly, you can make your own NFT too.<\/p>\n\n\n\n

It would be interesting to understand what Defi (Decentralized Finance) is. Contemplate this\u2014Bitcoin embodies the value (like a fiat currency) that works on its blockchain. On the other hand, Defi allows you to lend, borrow, and trade in cryptocurrencies. To use an analogy, DeFis is similar to financial institutions such as banks.<\/p>\n\n\n\n

Types of cryptocurrencies Explained<\/span>?<\/h2>\n\n\n\n

Cryptocurrencies<\/a> are further categorized as coins and tokens. Coins have their blockchain. On the other hand, tokens do not have their blockchain and are made on an existing one. For example, Ethereum is a blockchain, and ether is its inborn coin. However, a token such as BAT works on this blockchain.<\/p>\n\n\n\n

\n

Coins serve as mediums of exchange, while tokens are assets. Tokens can be traded for their worth and even risked if you need to earn interest.<\/p>\n<\/blockquote>\n\n\n\n

Some examples of tokens are Chainlink, Uniswap, or Polygon. Bitcoin is, of course, the world’s most famous crypto token. You can learn more about it here<\/a>.<\/p>\n\n\n\n

Blockchain enables the transactions of crypto coins, while tokens hinge on keen contracts for trade. A token represents what a person retains, while a coin symbolizes their competence to own.<\/p>\n\n\n\n

A coin as an element of currency runs independently on its blockchain. You can use it the same way you would use real money to pay for services. El Salvador is the first country to adopt Bitcoin as a legal tender. Some of the popular categories of cryptocurrencies are discussed below.<\/p>\n\n\n\n

Altcoins<\/h3>\n\n\n\n

\u201cAltcoin\u201d denotes any sort of cryptocurrency other than Bitcoin. The term \u201caltcoin\u201d is short for \u201cother coins.\u201d There are thousands of altcoins, but Ethereum is the most popular altcoin. Of the entire cryptocurrency universe, Bitcoin makes up close to half of the total crypto market cap, while Ethereum comprises \u200b\u200bnearly a quarter. Altcoins hold the remaining market share.<\/p>\n\n\n\n

Some of the popular altcoins are:<\/p>\n\n\n\n