Cryptocurrency

Published on January 30th, 2020 | by Bibhuranjan

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5 Types of Crypto Currencies You Should Know About

There are five kinds of digital money you can group under advanced money. These are critical for digital money financial specialists to figure out the resources you are putting and the primary spots. These determine they determine what you’re investing in and who can invest in the first place. From coins to tokens, stable coins to utility and security tokens, here are the primary kinds of cryptographic money you have to think about.

1) Coins and tokens: This is the biggest distinction in crypto currency. It is important to note that every crypto currency has either one or the other. The biggest and the most important difference between coins and tokens are that Coins have their own blockchain and Tokens do not. Major companies in crypto currency like Ethereum, Bitcoin and Ripple are coins. There is a decentralized, distributed system that records exchanges on a computerized record as they have their own blockchain. Unlike coins, tokens do not have it’s own blockchain. As for token creation the Ethereum blockchain is the most prominent stage. However you can hypothetically make a token on any blockchain. 0x (ZRX), Maker (MKR) and Basic Attention Token (BAT) are examples of ERC-20 tokens. They are a specific type of Ethereum-based token. At the end of the day, their convention exists ‘over’ the Ethereum blockchain.

2) Coins can function as currency while tokens represent access to a product or stock. Coins can serve as a currency as they have their own blockchains. This can be a mean of exchange within the network. Thus the name digital gold is given to Bitcon. On the other hand Ripple is known for their quick exchange.  It’s simpler to change over USD to a coin instead of a token it is easier to change UDS to coins instead of tokens. Trading USD for a coin requires putting resources into a token as a rule.

3) Utility tokens and security tokens: it is really important for investors crypto currency companies and the government to understand the difference between these two. The SEC has much stricter rules and regulations for security tokens than it does for utility tokens. This is because they can be digital securities. Most tokens are utility tokens.  Buying or trading without being an accredited investor in token crypto currencies makes it a utility token. This indicates exclusive access, a discounted rate, or even an early access. If it is a smart contracts and DApps, it can be a utility token. Basic Attention Token indicates attention, not stock or currency which makes it a utility token. Anyone can trade utility tokens on a crypto currency exchange

4) Like securities, security tokens represent part-ownership in a tradable, real-world asset external to the blockchain. They are different from utility tokens.  There are accredited investors to participate in STOs as security tokens are regulated by the SEC like securities. However, investing security tokens are a bit more difficult. To invest, you have to use a token issuance platform for tokenized security. You also need to fulfill a number of requirements. Through KYC, you need to have your accredited investor status confirmed. The profile created will show hoe and hoe much one can invest.

5) Stable coins are actually stabletokens as they don’t have a blockchain. They can be passed off as traditional assets like fiat or gold. Crypto currency investors can move their money from volatile crypto currency to stablecoins instead of converting it back to USD. However, the value can also vary. Most are USD, nut not all.

The distinction between the crypto currencies continues to become more blur with the development of new applications for digital currencies.

The following infographic was provided by Betway.

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About the Author

Bibhuranjan

Editorial Officer, technofaq.org I'm an avid tech enthusiast at heart. I like to mug up on new and exciting developments on science and tech and have a deep love for PC gaming. Other hobbies include writing blog posts, music and DIY projects.



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