Major Types of Cryptocurrencies

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Major Types of Cryptocurrencies

Currency Coins/Payment Tokens

The most obvious kind of cryptocurrency is that which is used as a means of payment, a form of digital money. This was the original use case of cryptocurrencies and the one that is familiar to most. This began with the invention of Bitcoin but hundreds of other cryptocurrencies for payment, also known as currency coins or payment tokens, have since been created. There are many ways to group the various currency coins, the first and most obvious distinction is between the novel Bitcoin coin and everything else that came after.

Bitcoin

“What is Bitcoin?” – link to above

Altcoins

The term ‘altcoins’ is used to collectively refer to all the cryptocurrency coins other than Bitcoin, or in other words ‘alternatives’ to Bitcoin. There are thousands of altcoins which offer slightly different features to Bitcoin, such as faster mining or enhanced safety. Some of the major ones are:

  • Ether (ETH)
  • Ripple (XRP)
  • Litecoin (LTC)

There are further altcoin sub-categories:

  1. Stablecoins: These digital currencies are asset-backed with the aim of bringing stability to the normally volatile nature of cryptocurrencies. Some of the major ones are:
    • Fiat Collateralized
      • Tether (USDT) – Issued by Tether and backed by USD
      • USD Coin (USDC) – Founded by Circle and Coinbase, Issuable by the CENTRE Consortium and backed by USD
      • CNHT – Issued by Tether and backed by Offshore Chinese Yuan
    • Real/Commodity Asset Collateralized
      • PAX Gold (PAXG) – Issued by Paxos and backed by gold
    • Crypto Collateralized
      • Dai – Issued by MakerDAO and backed by Ether
    • Multi-Asset Collateralized
      • Libra – Proposed by Facebook and to be backed by a basket of assets
  2. Central Bank Digital Currencies (CBDCs): This is cryptocurrency that is issued and governed by a central bank and is an alternative form of legal tender to money. Many countries are researching this and seriously considering the possible introduction of a CBDC, for example:
    • China – DC/EP
    • Sweden – E-krona
    • Bahamas – Sand Dollar
    • Eastern Caribbean Currency Union – DXCD
    • Marshall Islands – SOV
    • Thailand – Project Inthanon
  3. Privacy Coins: These offer enhanced privacy features and are designed to keep transactions completely anonymous by making the identities of transacting parties untraceable. Examples:
    • Monero (XMR); Zcoin (XZC); Bytecoin (BCN); Grin (GRIN); Super Zero (SERO);
    • Dash (DASH); Zcash (ZEC); Horizen (ZEN); Komodo (KMD); Verge (XVG)

Utility Tokens

These are developed for use within a particular application for some purpose specific to the app/platform i.e. to be used natively on a single platform. For example, they are issued by a company to the platform users which they can then use for transactions that take place on the company’s application. This is one of the most common uses however there are many other possibilities which in general give the holder some platform-based benefit. Most utility tokens are built on the ERC20 Ethereum Standard.
Examples: OKB – Issued by OK Blockchain Foundation for holders to enjoy exclusive functions on the OKEx Trading Platform.

Security Tokens

A security token is representation of tradable financial assets on blockchain, such as equity or stock, and generally represents share in the issuing company. Their value is derived and varies along with the company’s performance. They can be traded outside of the company platform and they can fall under certain securities regulations. The Howey Test has been developed by the US Supreme Court to determine if a token should be classified as a security token and thus be subject to specific securities legislation.
Examples: OSTKO – Issued by E-commerce company overstock.com; STKR – Issued by StakerDAO

AI Link Group Limited, through its operating affiliates, AI Link Finance Limited (collectively “ALG” or “AI Link”) provides TradeFi, an integrated platform which allows holders of Ethereum-based stablecoins to earn interest income generated from trade finance assets.

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