What Various Crypto Assets Fall Under Each Category?

Various Crypto Assets

If you’ve ever heard the term “Crypto Investors,” it’s likely that Bitcoin immediately came to mind. A digital representation of wealth that is cryptographically protected is called a crypto asset. Let’s investigate them in greater detail to see how Bitcoin fits in.

Category 1: Money used for payments

Payments are made using payment currencies like Bitcoin (BTC) and Litecoin (LTC) (surprise surprise). To encrypt, control, and the proper verification for the parties making the exchanges, there is a huge usage of blockchain technology. While the majority of cryptocurrencies technically allow for payment, a considerably larger range of retailers accepts payment currencies instead.

Category 2: Blockchain economies

The next in the series is the blockchain economy. In fact, there are many platforms helping in increasing the work boundaries of blockchain technology. It makes it able to become more than payments. A couple of examples of blockchain economies are Ethereum and Cardano. Decentralized coins and applications can be created on Ethereum, but Cardano expands on this concept to create a platform that is more scalable, sustainable, and interoperable.

Category 3: private coins

private coins

Now let’s talk about privacy coins. To protect the confidentiality of transactional information, this kind of crypto asset uses additional encryption layers. Owners of private coins are anonymous, their wallet balance is private, and only the sender and recipient are aware of the amount paid or received in a transaction, in contrast to Bitcoin. The privacy coins Dash (DASH) and Monero (XMR) are two examples.

Category 4: Utility tokens

Utility tokens are designed for a specific purpose in a blockchain system. Most utility tokens, like Basic Attention Token (BAT) and 0x, are ERC-20 that work on the Ethereum network. To improve the effectiveness of digital marketing, for instance, BAT created the Brave browser, a blockchain-based ad platform. There is a test called the Howey test which helps in determining whether crypto is a utility token or not.

Category 5: Stablecoins

Stablecoins, which are well-liked by traders for their consistent pricing, is correlated to another asset class in order to lower volatility. You may be familiar with Tether (USDT) and Dai (DAI), two cryptocurrencies that are both linked to the US dollar. However, different stablecoins employ various techniques to keep their value stable.

Category 6: Security tokens

Cryptographic assets that pass the aforementioned Howey test are security tokens. They serve as a stake in a blockchain project and frequently have the potential to be profitable in the future. Blockchain Capital (BCAP), which debuted in April 2017 alongside the first tokenized investment fund in history, was the first security token ever created.

Category 7: Non-fungible tokens

The value of non-fungible tokens (also known as NFTs or crypto-collectibles) is based on their rarity. CryptoKitties were invented in 2017. The purpose was to breed colorful kitties. It used the Ethereum network. NFTs today range from Tweets to fragrances and are available in all sizes and styles.

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Category 8: Decentralized Finance

DeFi is the last option. Smart contracts have a usage by the DeFi movements. Anyone who has an internet connection can get the financial services of the decentralized system. One of the most famous ones is the Ethereum platform which is decentralized and also allows yield farming, lending, borrowing, stalking, etc. there is a variety of other options available using which you can achieve more income sources. Here you may find out more about DeFi and its uses.

Two well-known DeFi tokens, Chainlink (LINK) and Compound (COMP), fuel their respective blockchain platforms. The compound is a system that permits the lending and borrowing of cryptocurrencies, whereas Chainlink is an oracle network that links blockchains to data from the outside world.

Many of these crypto assets will likely be familiar to you. Additionally, you should look into some other crypto wallets if passive income from DeFi appeals to you. They make DeFi-powered earning easy, secure, and stress-free and are totally free to use. Did we also mention that, depending on the currency you choose, they can generate a handsome AER? You can always read more if you are interested in learning more about crypto assets under each category. You may now quickly set up yours by going to the specific app of your choice.