Cryptocurrencies have become a popular class of digital asset that can be stored, used, and exchanged.
These digital assets are not the same as traditional financial instruments such as gold or shares owned by companies.
This raises the question: what are cryptocurrencies good for?
The answer depends on the key in of utility you want from your cryptocurrency.
In the crypto space, a couple of cryptocurrencies were designed with the main purpose of being money.
The two major cryptocurrencies that fall into this category are Bitcoin and Litecoin.
Bitcoin is currently the most popular cryptocurrency.
Bitcoin has shown that it can be leveraged over time to earn better returns.
Litecoin was created to complement Bitcoin by providing users with a faster means of transacting money over the internet.
Litecoin isa deflationary currencyand has witnessed price gains over the years due to its global liquidity and finite supply.
Protocol/Exchange Cryptocurrencies
Protocol-level coins are cryptocurrencies that have a custom blockchain.
These protocols allow the functioning of applications and provide security and access to the blockchain.
Exchanges are platforms that allow users to buy or sell cryptocurrencies for fiat currencies such as USD or EUR.
These protocol networks provide ways to earn returns through staking withproof-of-stake (POS) algorithms.
BNB is a cryptocurrency built on a custom blockchain called BNB Chain.
BNB is the blockchain token that powers transactions on the BNB Chain.
Gaming/NFT Cryptocurrencies
Gaming and non-fungible tokens (NFTs)are among the most popular cryptocurrencies today.
They’re designed to be used in games and online applications.
For example, a gaming NFT token can represent ownership of virtual items or digital assets within gaming applications.
These digital assets have unique characteristics and cannot be replicated or cloned.
A popular case in point of a gaming/NFT token is Axie Infinity (AXS).
Axie Infinity is an NFT-based game known for its in-play virtual economy.
Players collect and trade digital pets known as Axies.
Axie Infinity (AXS) is also tradeable on major exchanges, which makes it unique.
Smart Contract Cryptocurrencies
Smart contractsare self-executing contracts that can be used to make transactions.
MKR tokens are needed for voting rights in the development of the Maker Protocol.
Polymath (POLY) is another cryptocurrency making waves in the smart contract category.
More cryptocurrencies in this category include Miota (IOTA) and Stellar (XLM).
Privacy Cryptocurrencies
Cryptocurrencies that are privacy-focused come in various forms and shapes.Privacy cryptocurrenciesenable anonymous and private transactions.
These coins/tokens don’t require personal information to use or trade with.
Monero (XMR) is a decentralized cryptocurrencywith privacy-enhancing technologies that mask transactions to achieve anonymity and fungibility.
This makes Monero user transactions, wallet balances, and trading activity extremely hard to decipher.
As a result, this cryptocurrency offers next-level privacy.
Zcash (ZEC) is another privacy-focused cryptocurrency.
It uses advanced-level cryptography to provide enhanced privacy for its users.
FinTech Cryptocurrencies
This final categorization focuses on cryptocurrencies that use blockchain technology to create new applications and financial products.
Ethereum, the second largest cryptocurrency by market capitalization, heads the list of cryptocurrencies in Fintech.
Solana is another blockchain with financial and technological attributes.
It is a high-performance blockchain with a native currency called SOL.
It supports developers around the world in creating crypto apps with its scalable blockchain infrastructure.
