Based on data from CoinMarketCap, we have a total of 22,805 cryptocurrencies, with the number still growing. All cryptocurrencies rely on the same premise of a consensus-based decentralized and immutable ledger to transfer value digitally between trustless parties. However, there are subtle and not-so-subtle differences between them.
We look at the ten best cryptocurrencies with their examples.
1. Stablecoins
Stablecoins are mainly backed by a stable or fairly value-stable asset like fiat. As such, their value is somehow predictable as it remains the same almost always. The best example of a stablecoin is the USD Coin. USDC is a stablecoin having a fixed value of $1 per coin. It was developed by Centre, a technology project whose backing is by Coinbase and Fintech company Circle. The coin is always worth $1, which is safe and secure.
USDC works with various ERC-20 compatible wallets and a long list of crypto exchanges. Additionally, it has real-world use in global commerce and money transfers. USDC is not the only stablecoin. Other major stablecoins pegged to the dollar include Tether (USDT), Binance USD (BUSD), and DAI.
2. Memecoins
The term mainly stands for types of cryptocurrencies, depicted with comical and animated memes, with the support of enthusiastic online traders and followers. The best example of a memecoin, Shiba Inu (SHIB), comes in the mix as a top memecoin with growing utility. Based on claims by its anonymous creator, Ryoshi, it is a spontaneous experiment on the community-driven initiative. SHIB is named after the Japanese dog breed, Shiba Inu.
SHIB has been in the limelight for different reasons, even if its value is low. However, the coin is taking over much of the crypto market and proving itself an excellent choice for investors. Another major memecoin is Dogecoin.
3. ISO 20022 Compliant Crypto Coins
The category mainly includes a collection of compliant digital coins and tokens that satisfy the standards of the International Organization for Standardization (ISO) standards 20022. One of the best examples in this category is Ripple (XRP). Ripple, a digital asset, aims to provide fast and secure transactions for enterprise customers—the XRP token bridges different currencies, allowing users to transfer money quickly and cheaply. The XRP design is majorly to migrate transactions from central databases to more open infrastructures while cutting costs.
The XRP ledger differs from other blockchains, as it only allows select network participants to help validate transactions and secure the network. XRP is a viable alternative to many banks’ current international payment system.
Other examples include Quant and Stellar (XLM).
4. DeFi Tokens
They easily represent a set of cryptocurrencies native to automated, decentralized platforms operating using smart contracts. One ideal example is MakerDAO (DAI). Although it is a stablecoin, it is an ERC20 token on the Ethereum blockchain, having a steady value of one US dollar. A smart contract system that automatically executes itself keeps its price in check.
DAI is a hybrid stablecoin backed by various underlying assets, automated mechanisms, and external actors to maintain its stable peg to the USD. In extreme market volatility, DAI uses a Target Rate Feedback Mechanism (TRFM) to dampen volatility, providing liquidity during demand constraints. Another example in this category is Chainlink (LINK).
5. Metaverse Coins
Simply put, metaverse coins are the currency that people use in the metaverse. The best example in this category is Decentraland (MANA). Decentraland is a cryptocurrency that allows users to purchase, develop, and trade virtual land in a decentralized manner. The native currency of the platform is MANA, which purchases land on the platform.
When one purchases land in Decentraland, they purchase a smart contract granting them sole ownership of that particular piece of land. The land is then stored on the Ethereum blockchain, and one can do with it whatever they please. One can also use MANA to purchase other virtual goods, including in-game items, avatar customizations, and access to premium content
Other examples include Theta Network (THETA), Axie Infinity (AXS), and The Sandbox (SAND).
6. Utility Tokens
These tokens represent a value on the blockchain, such as certain access to a product or service run or operated by the issuer. A basic Attention Token (BAT) is one of the best cryptos in this capacity. It is a blockchain-based system that tracks media consumers’ time on websites using the Brave web browser. As such, it is a currency on the Brave platform and can receive several advertising services. It can be exchanged between users, advertisers, and publishers.
Besides, the creation of BAT seeks to improve how advertising is done in the digital age. This will be through tracking how users interact with digital advertising and storing that information in a distributed ledger; as such, users will experience fewer ads and content better tailored to them.
7. Security Tokens
They are tokens that securitize the tokenization of properties, bonds, stocks, real-estates, property, and other real-world currencies. Centrifuge (CFG) is the best example of a security token. $CFG is a decentralized finance lending protocol to make credit more accessible to small businesses. Additionally, it aims to provide a stable yield for investors by opening pooled liquidity to the world of traditional finance.
CFG powers the Centrifuge platform, providing security to the blockchain while allowing holders to pay transaction fees, stake assets, and participate in the platform’s governance.
8. Payment Tokens
The name is suggestive, as it refers to the crypto used for buying and selling goods and services on digital platforms without an intermediary. One of the best examples in this category is Bitcoin (BTC), a cryptocurrency designed to act as money and a form of payment outside the control of any one person.
Bitcoin is a form of digital currency that aims to eliminate the need for central authorities such as banks or governments. Each individual coin represents the value of Bitcoin’s current price. However, one can also own partial shares of each coin. Each Bitcoin’s smallest denomination is Satoshi, a hundred millionth of one Bitcoin.
9. Exchange Tokens
A crypto exchange token entails a digital asset native to a crypto exchange. BNB Token is the best example in this category. It is the cryptocurrency coin powering the Binance Chain ecosystem.
BNB works in the same way as other digital assets in the market, in that it can rise and fall in value as people use and trade it. Binance burns BNB coins quarterly, which decreases the coin’s supply and affects its rarity, ultimately affecting its value.
10. Privacy Tokens
As the name suggests, they are cryptocurrencies used for privacy applications as their code encourages better privacy than Bitcoin and mainstream crypto. Zcash is the best example of a privacy token. Built on a decentralized blockchain, it uses an advanced applied cryptography to provide enhanced security and privacy through shielded addresses.
It is a blockchain-based payment network utilizing the zero-knowledge proofs to shield transactions. This in turn makes the contents of a transaction private even on a public blockchain.
Final Thoughts
Crypto assets currently represent necessary technological, financial, and economic steps worldwide. However, investing in them is also risky.
As such, before venturing into any of the above cryptocurrencies, DYOR and invest capital you are willing to lose.
Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.
