The Different Types Of Cryptocurrencies

Did you know that as of 2021, the cryptocurrency market was worth more than $2.2 trillion? That’s a vast difference from 10 years prior when it was only worth an estimated $10 million. As the cryptocurrency market continues to grow, so do the types of coins that are available to purchase and trade. Currently, there are more than 15,000 different cryptocurrencies that fall into roughly four categories.

Currency Coins

The most common type of cryptocurrency is made to be used as currency and is what you’ll most commonly find on sites such as OKX Exchange. Bitcoin, which was the world’s first cryptocurrency, was made for this purpose, for example. The goal of crypto meant to be used as actual currency was to make payment transactions faster and more affordable to complete.

When it was first released, one Bitcoin was worth about $1. These days, the value is about $48,000. Cryptocurrency is used on any decentralized blockchain, which means it cannot be governed by specific governments.

Object Coins

For many buyers, the future of cryptocurrencies lies in object coins. Object coins were originally created for special projects with the goal of solving the world’s problems. One example is Siacoin (SIA) which was created to solve the problem of expensive cloud storage. It’s known as the leading decentralized cloud storage platform and uses blockchain technology to create robust data storage that is more affordable than many traditional cloud storage providers.

Other examples include the Ethereum-based Decentraland, which is for buying virtual NFT-based land, and Terra (LUNA), which is working to become a stable e-commerce payment.

Asset Coins

Also known as stablecoins, asset coins derive their value from an external asset’s value. One of the most common examples is the USDT, which matches its value to the value of the U.S. dollar. Another example is Gold GLC, which ties its value to the external asset of gold.

In the past, if investors decided to exit cryptocurrency, they could exchange their asset coins for other cryptocurrencies or for the equivalent in flat currency. The rise of stablecoins means that investors can choose to trade in their coins for other cryptocurrencies that are more stable. These hybrids include features of both commodities and currencies.

Meme and Joke Coins

Meme and joke coins are created strictly for fun and do not have any specific purpose. Despite that, they can still be worth millions. One of the most common examples is Dogelon Mars (ELON). It was created as a joke but now has a market capitalization of more than $500 million. Despite their fun names and their overall worth, it is important to note that meme coins are largely speculative assets and can be quite risky, especially for those who are new to trading.

One example of risk is the Squid crypto, which recently went zero in value and had its owners run away with millions of dollars worth of people’s money. Despite their volatile value, some joke coins, such as Dogecoin and Shiba Inu are now part of the bigger crypto race and are no longer considered joke coins.

Regardless of whether you’re just starting out or have been investing in cryptocurrency for some time, it is important to understand what your different options are. Diversifying your portfolio can be important for your investment’s bottom line.

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