Cryptocurrency has taken the world by storm since the introduction of Bitcoin in 2009. Today, the cryptocurrency market is populated by thousands of digital assets, each with its own unique features and use cases. With so many cryptocurrencies available, it can be challenging to understand the different types of crypto and their distinctions from one another. In this article, we will explore the most common types of cryptocurrency, the reasons for their proliferation, the benefits of investing in these digital assets and highlight 5 coins that are popular today. We will also take a closer look at BinStarter IDO Launchpad and how it relates to the world of cryptocurrency.
How Many Cryptocurrencies Are There?
The current world of cryptocurrency is home to thousands of different digital assets, each offering its own unique features and functions. Despite these differences, the majority of these cryptocurrencies are based on principles similar to those of Bitcoin.
These principles include the decentralization of the currency, meaning it is not controlled by a central authority such as a bank or government. Cryptocurrencies also utilize a distributed ledger system known as blockchain and a peer-to-peer review process to ensure their security. This security is further strengthened by the use of cryptography, specialized computer code that encrypts the currency. As assets, cryptocurrencies are typically stored in digital wallets, most commonly a blockchain wallet, which provides users with the ability to manage and trade their digital assets.
As of February 2023, CoinMarketCap lists over 8,000 cryptocurrencies. While many of these are small, obscure coins with low trading volumes and market capitalization, some are well-established with significant trading volumes and market capitalization. The exact number of cryptocurrencies is difficult to determine as new ones are created every day, while others are abandoned and eventually disappear.
Why Are There So Many Different Cryptocurrencies?
The main reason for the proliferation of cryptocurrencies is the open-source nature of blockchain technology, which enables anyone to create their own digital asset. This has led to a large number of entrepreneurs, developers, and enthusiasts creating new cryptocurrencies with unique features and use cases. Some are created as a form of currency, while others are designed to be used in specific industries, such as gaming, real estate, or the sharing economy.
What Are the Different Types of Crypto?
- Crypto Coins
Crypto coins, also known as cryptocurrencies or digital currencies, are digital assets designed to serve as a medium of exchange. The most well-known example is Bitcoin, which was created to serve as a decentralized alternative to traditional fiat currencies. Other examples include Ethereum, Ripple, and Litecoin. These coins are typically used for online transactions and are decentralized, meaning they are not controlled by any central authority.
Tokens are a type of cryptocurrency that are built on top of existing blockchain platforms, such as Binance Smart Chain (BSC) upon which $BSR is constructed. BSR is the native utility token of BinStarter, a prominent IDO launchpad. As a form of cryptocurrency, $BSR enables holders to stake and receive incentivized rewards or invest to gain guaranteed access to BinStarter's token sale event allocations.
Tokens can represent a wide range of assets, including virtual shares, digital assets, and even physical assets such as real estate. Tokens can also be used for a variety of purposes, such as raising funds in an initial coin offering (ICO) or representing access rights to a particular platform or service.
Altcoins are alternative cryptocurrencies to Bitcoin. They are created to address specific problems or to offer improved features over Bitcoin. For example, some altcoins offer faster transaction speeds, lower fees, or greater privacy than Bitcoin. Some well-known altcoins include Ethereum, Ripple, and Litecoin.
The 5 Top Cryptocurrencies by Market Capitalization, as of June 25, 2022
1. Bitcoin (BTC)
• Crypto Type: Token
• Market Cap (06/25/22): $410,202,265,385
Bitcoin is the dominant player in the cryptocurrency market, and it was the first cryptocurrency to be created. Launched in 2009, Bitcoin was created by a person or group of people under the pseudonym Satoshi Nakamoto. As of June 2022, there are just over 19 million Bitcoin tokens in circulation, with a capped limit of 21 million. Nearly 1,000 new Bitcoins are mined every day, bringing it closer to reaching its finite maximum number.
Bitcoin was designed to be independent of any government or central bank, relying instead on the decentralized public ledger of the blockchain. The blockchain uses cryptography and peer-to-peer verification to validate transactions, which has become the foundation of most cryptocurrencies today. The peer-to-peer structure of the blockchain is decentralized, functioning in the best interest of all parties involved instead of benefiting a central entity. The peer-to-peer network connects different computers or nodes to work together, and it aims to be censorship-resistant, open, and public.
Miners use powerful computers to verify transactions and generate new Bitcoins, using a complex and time-consuming process called proof of work. The transactions are recorded permanently on the blockchain, helping to validate each Bitcoin and secure the network. However, the energy consumption required to create Bitcoin has raised concerns about its impact on the environment.
2. Ethereum (ETH)
• Crypto Type: Token
• Market Cap (06/25/22): $150,833,549,828
Like Bitcoin, Ethereum is a blockchain network, but it was designed to support the creation, publication, monetization, and deployment of decentralized applications (dApps) rather than as a currency. The native Ethereum currency, Ether (ETH), was developed as a form of payment on the platform. It can be thought of as fuel that powers the Ethereum blockchain. Ethereum has been instrumental in launching initial coin offerings and has been behind the growth of non-fungible tokens (NFTs).
Comparing Ethereum and Bitcoin directly is common, but they were designed to achieve different goals and can be seen as complementary forces. Bitcoin is a peer-to-peer digital cash network that facilitates transactions without a central authority, while Ethereum, known as the world computer, builds on Bitcoin's technology by adding smart contracts. Smart contracts allow the creation of dApps that cover a range of crowdfunding platforms, financial instruments, digital games and collectibles, and decentralized marketplaces.
As of June 2022, Ethereum was ranked second among virtual currencies, behind Bitcoin. Like Bitcoin, ETH is created using a proof of work system, but there is no limit to the number of ETH that can be generated.
3. Tether (USDT)
• Crypto Type: Stablecoin
• Market Cap (06/25/22): $66,837,248,865
Tether is the first cryptocurrency that was marketed as a stablecoin, a type of crypto that is collateralized by a fiat currency, in this case, the U.S. dollar. Tether is the largest stablecoin in the world and is widely used for trading cryptocurrencies. Its value is pegged to the U.S. dollar and aims to provide stability, transparency, and lower transaction fees to its users. Tether was not intended to be a speculative investment and was originally used by investors to avoid the high volatility of other cryptocurrencies.
However, its claim of maintaining a 1:1 value with the U.S. dollar has been disputed. Tether is considered a crucial component of the crypto ecosystem, and a potential collapse of Tether could have significant repercussions on the entire crypto market. In May 2022, Tether briefly lost its peg to the U.S. dollar, leading to a panic in the crypto market and a significant drop in all cryptocurrencies. This led to many investors trying to redeem their tethers and exit the asset class, resulting in losses for many.
4. USD Coin (USDC)
• Crypto Type: Stablecoin
• Market Cap (06/25/22): $55,887,416,457
USD Coin (USDC) is a digital stablecoin that is pegged to the U.S. dollar and operates on several blockchains, including Ethereum, Stellar, Algorand, and Solana. It was created by the Centre consortium, consisting of Circle and Coinbase, and each USDC token is backed by $1 held in reserve and audited regularly by Grant Thornton, a well-known accounting firm. USDC was launched in 2018, and in 2021, Visa announced that it would support the use of USDC for settling transactions on its payment network.
Like Tether, USDC aims to provide stability and lower transaction fees and operates as a stable form of exchange, with each USDC token being worth one U.S. dollar. Stablecoins can be issued by centralized institutions or be collateralized in a decentralized manner, and they can use various algorithmic mechanisms to maintain stability. Some investors believe that USDC is more transparent than Tether, as its reserves are audited by the American branch of Grant Thornton. As of June 2022, there were 55.09 billion USDC in circulation.
5. Binance Coin (BNB)
• Crypto Type: Coin
• Market Cap (06/25/22): $39,135,965,106
Binance Coin (BNB) is the token for Binance, one of the largest cryptocurrency exchanges in the world. Binance created BNB as a utility token for use as a medium of exchange on its platform and originally built it on the Ethereum blockchain before moving it to its own blockchain. BNB allows traders to receive discounts on trading fees on Binance and has since expanded its use cases to include payments, travel booking, entertainment, online services, and financial services.
As one of the top five cryptocurrencies by market cap in 2022, BNB has established a wide range of applications in the real world. However, it, like other digital assets, has faced regulatory challenges both domestically and internationally. Binance created a maximum of 200 million BNB tokens, and during its ICO, half of the tokens were made available to investors. Binance periodically buys back and destroys some of the tokens it holds to reduce the overall supply and increase the value of the remaining tokens.
In conclusion, the world of cryptocurrency is vast and varied, with thousands of digital assets available for investment. Understanding the different types of cryptocurrency, including crypto coins, tokens, and altcoins, is crucial for making informed investment decisions. BinStarter IDO Launchpad is a platform that provides a seamless and secure investment experience for users, making it easier for investors to participate in initial decentralized offerings (IDOs) and other investment opportunities in the cryptocurrency space. By providing access to a wide range of investment options, BinStarter IDO Launchpad is helping to democratize the world of investing and make it accessible to a wider audience.
BinStarter is a decentralized mining-style approval mechanism insurance protocol that is designed to examine projects according to certain criteria for 30 days and to protect liquidity providers against possible financial damages or any negativities.
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