Cryptocurrencies – Different Types and Categories
Cryptocurrencies (cryptos) are all set to complete ten years of existence early next year. Over the past decade, much has been achieved. What started off with just Bitcoin has since expanded into an international movement; where thousands of new cryptocurrencies have been created over ten years. The number of new cryptocurrencies and cryptocurrency tokens continues to rise with every passing day.
Initial Coin Offerings (ICOs) are how new cryptocurrencies are launched. ICOs are held by the developers and the promoters of a new currency, which are looking for funds to work forward on their technology. Once enough funds are raised, the currency is then listed across various cryptocurrency platforms and exchanges, following which trading commences.
ICOs however, are quite controversial. They have led to a number of investment scams and exit scams in the past. Developers and promoters tend to lure investors into a lucrative scheme which offers guaranteed and high returns on investments. This has led to various economic watchdog bodies such as the US SEC and Japan/Korea’s. Authorities have sreved cease and desist notices to such schemes.
That aside, cryptocurrencies are an emerging sector with over two thousand cryptos and tokens being traded across hundreds of exchanges around the world. It must be kept in mind that all cryptos tend to serve a purpose. There are multiple types of currencies in the markets. Understanding these type-based classifications would help you make a better buying decision when it comes to investing in the best cryptocurrencies. Let us take a closer look at the different types of cryptos in the markets:
Types of Cryptocurrencies
Here are the different types of cryptocurrencies that exist in the markets. It must be noted that this is not an exhaustive list. Numerous cryptos are constantly added to the mix almost every day. Here’s a look at a broad classification of cryptocurrencies:
Basic Store of Value Cryptos
These currencies which act as basic stores of value are created to be transactional units which would be used as alternatives to fiat money. They would be used to purchase stuff over the digital economy. They can also be use to transfer funds from one person to another without really involving a third-party banking system. These currencies primarily act as a store of value. The primary reason behind creating them is that they would be worth an amount, akin to physical currency notes but in a digital form. The most popular example of this kind of cryptocurrency is Bitcoins.
Banking Focused Cryptocurrencies
The banking and finance sector has accepted cryptocurrencies and the blockchain technology. Ironically, these technologies were created to replace these systems. However, now there are certain cryptocurrencies and blockchain platforms being created specifically for the purpose of catering to the needs and services of banks. While many argue that this brings in regulations and centralization in cryptos which were originally created to be decentralized and deregulated. Currencies such as Ripple have proven to be massively successful!
The one thing that everyone knows about cryptocurrencies is that they are highly volatile in nature. Fiat currencies, on the other hand, are much more stable compared to cryptos. These fiat-pegged cryptos bring in the best of both worlds together. Some examples such as the TUSD and USDT have become increasingly popular. These currencies are pegged with the US Dollar and their price remains around $1. These currencies are the top preference of cryptocurrency investors who want their holdings to remain in the form of cryptocurrencies while not losing their value.
Entertainment Oriented Cryptocurrencies
A number of cryptocurrencies these days are coming up for entertainment related purposes. Currencies that are proposed to be paid to content creators or to makers of independent movies, etc. are becoming quite popular of late. Entertainment related currencies such as Steem have been around for quite some time. More of such platforms are emerging over the past few months. Moreover, currencies that pitch ending of piracy in music and movies have also emerged of late.
National Cryptocurrencies are a concept that has been discussed for some time now, but have come into effect only recently. The most popular example of such currencies is Petro. Petro ia an oil-backed cryptocurrency which has now been given the status of an official currency in Venezuela. Iran and Russia are also developing their own national cryptos. Reports indicate that together, the three plan to get more countries to begin trading with them in cryptocurrencies to bypass US sanctions.
National currencies are also being discussed in the UK in the form of the Royal Bank of England issued central bank currencies, as well as in India where the Reserve Bank is planning to launch CBCs.
Privacy Focused Cryptocurrencies
Anonymity and privacy are among the two top concerns when it comes to the world of cryptocurrencies. Privacy focused currencies have been a controversial matter in the past. Hence, government and authorities believe that they lead to money laundering and financing terror. However, there is an active demand among investors for privacy focused coins. The recent success of the likes of Monero and DASH, and for a short period, Verge, can be associated to the fact that there is a huge demand for cryptos which offer a high level of privacy. While certain governments (such as Japan) are starting off with a clampdown on such currencies, the demand for privacy focused cryptocurrencies continues to rise.
Gaming Focused Cryptocurrencies
Gaming is emerging to be another sector where cryptos have begun to attract large numbers of people. Cryptocurrencies in gaming can be used to purchase full versions of demo games, or to get access to certain unlockable items in the game and for payments for in-game purchases. Moreover, with the rise of immersive gaming in the world of VR and AR, gaming-focused currencies are becoming quite popular. MobileGo and GameCredits are two examples of gaming-focused cryptocurrencies.
The healthcare and insurance sector is also gaining a lot of popularity in the cryptocurrency markets. Currencies such as medx and healthureum are among some names when it comes to medical oriented cryptos. These ensure that payment for healthcare and health-related services are instant and smooth as they happen over a blockchain network. The healthcare sector has adopted the blockchain technology rather well.
Gambling Oriented Cryptos
Gambling is one such industry where cryptocurrencies have found a lot of fanfare. This is because they fall in a grey area in legal terms, hence the use of fiat currencies in gambling is strictly monitored and even taxed heavily in certain countries. Cryptos offer a parallel outlet where users can easily gamble using digital currencies. This makes it not only easier in terms of payment but also makes it more hassle-free because cryptocurrencies are easier to transact than traditional fiat money.
Cryptocurrencies for the Adult Industry
The adult industry is another booming sector where cryptocurrencies have found quite a user base. The likes of VICE token have been in popular demand and have been tying up with many major players across the industry. Porn websites are tying up with cryptocurrency partners to provide viewers with cryptocurrencies in exchange for watching their content. One of the biggest names in the world of adult entertainment, Playboy has also tapped the cryptocurrency markets of late. Cryptocurrency payments for premium porn as well as for cam models have become quite common in the adult industry.
Following the legalization of medical as well as recreational marijuana across various countries and regions, crypto entrepreneurs have taken the leap and are now providing users with the option of buying marijuana or funding the growth of marijuana with the help of cryptocurrencies and cryptocurrency tokens. Potcoin and Cannabis Coin are among two of the most popular names when it comes to marijuana related cryptos. With more countries legalizing it, this is a sector which is growing rapidly. Every time a country legalizes marijuana, these currencies witness a boost in terms of price as well as market capitalization.
Cryptos for Social Media
Last but not the least, cryptocurrencies aimed specifically for social media transactions have also been picking pace. Currencies such as Reddcoin have been created to promote the use of ‘tipping’ those who you support over various social media channels. Moreover, currencies are being created to promote fundraisers over social media as well. This is an emerging market which is expected to pick up pace soon. Moreover, the biggest name in the world of social media. Facebook is also looking forward towards starting off with their blockchain and cryptocurrency efforts in the months to follow.
In conclusion, cryptocurrencies are a booming market and a number of new currencies are joining the markets every day! Classification of currencies is quite important as it helps you understand in a glance about how a particular industry is moving. It also helps to analyze sectors that are becoming cryptocurrency friendly. As mentioned earlier, this list is not exhaustive and there are thousands of currencies being added to dozens of industries and sectors with every passing day!
Author – Khushboo Shah