29 Cryptocurrency Categories: Assessing Their Purpose and Potential

Cryptocurrency categories are a helpful way to narrow down the vast number of crypto and make them easier to manage. They can also help us identify new information or developments more quickly.

Cryptocurrencies, however, often lend themselves to multiple categories when their objective involves many initiatives simultaneously. In such cases, we may not factor in the overall classification, with the most distinctive being used as the main category. This method simplifies the system but only accounts for some areas of development, which can lead to incorrect assessments of a crypto’s purpose and potential.

Here are the 29 cryptocurrency categories

Base layer cryptocurrencies

Cryptocurrencies such as Bitcoin, Ethereum, and Litecoin are the base layer of an ever-growing decentralized financial system. These digital assets have become more commonplace as a store of value, medium of exchange, and way to enrich traditional finance. Base-layer cryptocurrencies run on blockchain network protocols that enable peer-to-peer transactions without the need for verification from third parties. The distributed ledger technology also makes it difficult to counterfeit or manipulate these digital assets. With their growing popularity and potential for widespread use, base-layer cryptocurrencies can provide immense opportunities for individuals and businesses.

Blockchains with smart contract capability 

Smart contract cryptos like Ethereum, EOS, and Cardano use blockchain technology to facilitate automated and self-executing transactions. Encoding contracts into code provides trustless security for agreements between two or more parties. Smart contract protocols allow businesses to reduce costs associated with paperwork, manual processing, and the potential for fraud. They also make it easier to track, manage, and execute large-scale projects with relative ease.

Blockchains without smart contract capability

Many cryptocurrencies do not feature smart contract capability. Instead, these coins leading utility is to purchase goods and services in the digital economy. Examples of these include Bitcoin Cash, Dogecoin, and Dash. Furthermore, as these coins do not connect to particular projects or companies, they offer users greater flexibility than cryptos with embedded smart contracts.

Ethereum ecosystem coins

Ethereum-based coins are cryptocurrencies that make use of the Ethereum blockchain. These coins offer users a wide range of features and benefit from tokens to decentralized applications. Examples of Ethereum ecosystem coins include Uniswap (UNI), Aave (AAVE), Maker (MKR), Compound (COMP), and Synthetix (SNX). These tokens are typically used to power applications built on the Ethereum blockchain and provide users access to a wide array of features within that ecosystem.

Stablecoins

Stablecoins are cryptocurrencies whose value mirrors that of a real-world asset, such as gold or fiat currencies. This system increases price stability and predictability, making them attractive options for maximizing their returns over time. 

Popular stablecoins include Tether (USDT), USD Coin (USDC), Paxos Standard (PAX), and Gemini Dollar (GUSD).

CEX coins

CEX coins are cryptocurrencies issued by centralized exchanges to enable users to trade more quickly and securely on their platform. Famous examples of CEX coins include Binance Coin (BNB), Huobi Token (HT), and OKB. In addition, you can use these tokens for other purposes, such as staking or paying transaction fees at a discounted rate.

Privacy coins

Privacy coins are digital assets designed to conceal the identity of users and transactions conducted on their respective blockchains. Examples include Monero (XMR), Zcash (ZEC), Grin (GRIN), and Beam (BEAM). These currencies offer greater privacy than public blockchain networks, allowing users to remain anonymous while enjoying the benefits of a distributed ledger system.

DeFi tokens

DeFi, or Decentralized Finance, is a new financial system built on blockchain technology. This ecosystem enables users to access various services and products without relying on third-party intermediaries. Popular DeFi tokens include Aave (AAVE), Compound (COMP), Maker (MKR), and Uniswap (UNI). Utilizing decentralized protocols, this new form of finance has opened financial services to a broader range of individuals worldwide.

BNB chain ecosystem coins

BNB chain ecosystem coins are a cryptocurrency issued by the Binance Smart Chain. These tokens can utility is to access features such as DeFi, dApps, and NFTs within the BSC ecosystem. Examples include PancakeSwap (CAKE), Venus (XVS), and SafeMoon (SAFEMOON). In addition, these tokens offer users the opportunity to take part in DeFi projects built on the Binance Smart Chain, as well as to purchase NFTs and use dApps.

Layer 2 coins

Layer 2 coins are cryptocurrencies built on top of existing blockchain networks. These tokens enable users to send and receive transactions much faster than those made on the base layer while retaining the same level of security. Examples include Polygon (MATIC), SKALE (SKL), and Avalanche (AVAX). By utilizing Layer 2 solutions, users can enjoy faster transaction speed with improved scalability.

Governance tokens

Governance tokens are cryptocurrencies that allow users to participate in the decision-making process of a project or protocol. These tokens allow holders to vote on critical decisions such as protocol upgrades, revenue allocations, and other matters related to the project’s governance structure. Examples include Compound (COMP), Maker (MKR), and Aave (AAVE). By holding these tokens, users can have a say in the future of these projects.

Cardano ecosystem coins

Cardano ecosystem coins are tokens built on top of the Cardano blockchain. These cryptocurrencies provide users with various features and services within the Cardano ecosystem, such as staking, voting, and using dApps. 

Examples include ADA (ADA), Ergo (ERG), and TrustPad (TPAD). By utilizing these tokens, users can participate in various services the Cardano network provides and gain access to dApps and staking rewards.

Solana ecosystem coins

Solana ecosystem coins are tokens built on top of the Solana blockchain. These digital assets enable users to access features such as staking, dApps, and DeFi services within the Solana network. 

Famous examples of Solana ecosystem coins include Serum (SRM), STEPN (GMT), and Lido DAO (LDO). By utilizing these tokens, users can benefit from staking rewards and gain access to various DeFi services and dApps.

Meme coins

Meme coins are digital assets that rose to popularity due to their association with online culture and potential for short-term speculative gains. Examples include Dogecoin (DOGE), Shiba Inu (SHIB), and Safemoon (SAFEMOON). Despite the novelty of these tokens, they still offer users the opportunity to participate in the crypto markets and benefit from potential gains.

Binance Launchpad coins

Binance Launchpad coins are tokens launched on the Binance Launchpad platform. They allow users to invest in projects that have undergone strict due diligence by the Binance team. Examples include Polygon (MATIC), Axie Infinity, and The Sandbox (SAND). As a result, users can benefit from the gains of investing in innovative projects.

Multichain platform coins

The Multi-chain platform allows users to transact on multiple chains securely and efficiently. Hosting a blockchain platform across various networks enables them to communicate, making decentralized applications accessible beyond a single chain. In addition, these applications can take advantage of different features offered by each network, such as privacy, scalability, and interoperability. The multi-chain approach also allows users to use the same wallet address on several blockchains meaning their digital assets are readily accessible without transferring them from one network to another.

Multichain coins include Uniswap (UNI), Chainlink (LINK), and AAVE.

NFT coins

NFT (non-fungible tokens) coins are digital assets that represent unique and non-interchangeable items, such as artwork or collectibles. These tokens are cryptographically secured and generate value through scarcity, which makes them attractive to investors. Examples include Sorare (SORA), Decentraland (MANA), and Enjin (ENJ). By investing in NFT coins, users can access unique digital items and benefit from potential gains.

Yield farming coins

Yield farming coins are digital tokens that reward users for providing liquidity to DeFi protocols. These tokens incentivize users to provide liquidity to various applications in exchange for rewards in the form of other digital assets. Famous examples include Curve (CRV) and Balancer (BAL). By investing in yield farming coins, users can participate in the DeFi space and benefit from rewards generated by providing liquidity.

Gaming coins

Gaming coins are digital tokens designed for use in gaming platforms. These tokens enable users to purchase items and services within the game, as well as gain access to exclusive rewards. 

As a result, users can benefit from a multi-faceted gaming experience and access exclusive game features using these tokens.

Examples include Enjin (ENJ), Decentraland (MANA), and The Sandbox (SAND).

Polkadot ecosystem coins

Polkadot’s blockchain network connects a variety of other blockchains known as “parachains” into a unified network. Polkadot aims to provide unprecedented scalability and speed, with the potential for up to 1 million transactions per second. Over 100 parachains have already been connected to the blockchain, paving the way for cryptocurrencies, including Cosmos, ANKR, Ocean Protocol, and OriginTrail, to take full advantage of this revolutionary multichain technology.

Play to earn coins

Play-to-earn coins are digital tokens designed for use in Play-to-Earn gaming platforms. These platforms enable players to monetize their time and rewards by playing games.

Examples include Axie Infinity (AXS) and The Sandbox (SAND). In addition, users can benefit from rewards earned through playing games and gain access to exclusive features.

Cosmos ecosystem coins

Cosmos is a decentralized network of independent blockchains that aims to enable the secure and reliable transfer of data and value between different chains. It allows users to connect their blockchain-based applications in a trustless manner, meaning transactions are secure, fast, and reliable. Examples include Cosmos (ATOM), Osmosis (OSMO), and Secret (SCRT). By investing in Cosmos ecosystem coins, users can benefit from the scalability and interoperability offered by this revolutionary multichain technology.

Automated Market Makers

Automated Market Makers (AMMs) are protocols that allow users to provide liquidity to the network in exchange for rewards. These protocols enable users to trade tokens without needing an intermediary, and they often offer low trading fees and high liquidity. Examples include Uniswap (UNI), SushiSwap (SUSHI), and Curve (CRV). By investing in AMM coins, users can benefit from the potential gains generated by providing liquidity to the network.

Staking coins

Staking coins are digital tokens that reward users for locking up their funds in a blockchain-based platform. In addition, these tokens incentivize users to provide security and validation of transactions for the network in exchange for rewards. Famous examples include Cardano (ADA), Ontology (ONT), and Tezos (XTZ). By investing in staking coins, users can benefit from potential gains generated by providing security to the network.

DAO coins

DAOs (Decentralized Autonomous Organizations) are managed and operated by autonomous computer programs that follow a predetermined set of rules. These protocols enable users to pool their funds together to pursue collective goals, often to generate profits. Examples include Maker (MKR), Compound (COMP), and Aragon (ANT). By investing in DAO coins, users can benefit from potential gains generated through their participation in the organization.

Wrapped tokens

Wrapped tokens are digital tokens that bridge the gap between different blockchain networks. They enable users to convert cryptocurrencies from one network into another, allowing them to interact with various blockchains in a trustless manner. Examples include Wrapped Bitcoin (WBTC), Wrapped Ether (WETH), and Dai (DAI). By investing in wrapped tokens, users can benefit from the convenience and flexibility offered by this revolutionary technology.

Oracle coins

Oracle coins are digital tokens enabling users to access off-chain data and interact with the blockchain. These protocols allow developers to create decentralized applications that can access real-world data and use it for various functions, such as financial services, prediction markets, insurance products, gaming platforms, and more. Examples include Chainlink (LINK), The Graph (GRT), and Band Protocol (BRT). In addition, by investing in oracle coins, users can benefit from the security and reliability offered by this revolutionary technology.

APTOS ecosystem coins

APTOS is a highly scalable, secure, cost-effective blockchain platform built with the Move programming language. Its modular design encompasses an array of advanced features to ensure safe, intuitive transactions. Parallel execution engines provide increased throughput and shorter block times, while their robust security protocols guarantee the privacy and integrity of data with strong cryptographic primitives. Low transaction costs make APTOS ideal for individuals and enterprises, making it a valuable part of any development stack.

Cryptocurrencies on the APTOS ecosystem include Trust wallet token (TWT), Axelar (AXL), and Mojito (MOJO).

Social coins

Social coins are digital tokens that reward users for engaging with various platforms. These tokens incentivize users to use the platform, post content, curate content, refer friends, and more. Famous examples include Steem (STEEM), Hive (HIVE), Leo Token (LEO), and Sapien (SPN). By investing in these tokens, users can benefit from the potential gains generated by their participation in the network.

Conclusion

There are many different types of cryptocurrencies out there, each offering its unique set of benefits. By carefully researching and selecting the correct coins, users can build a portfolio that aligns with their investment goals and risk tolerance. In addition, with the right coins, users can benefit from potential gains generated through their participation in the network.