10 Coin/Token Types You Should Know
Do You Speak Crypto: Episode 4
Welcome to our “Do You Speak Crypto” series!
It’s another day and another set of crypto terminologies for you to learn. At DIFX, we’re constantly looking for ways to raise awareness and improve knowledge within the crypto industry to lower the barriers to entry and drive mass adoption. Therefore, we’ve prepared a series of articles for you in which we’ll discuss common terms in different sections of the blockchain and crypto industry together.
Episode 4: Token/Coin Types
Cryptocurrencies are not just a medium of exchange anymore. They’ve come a long way since the creation of Bitcoin in 2009 and offer many different functionalities. In this episode of the “Do You Speak Crypto?” series, we want to take a quick look at various types of crypto tokens and the features they offer.
Alternative Coin (Altcoin)
Any cryptocurrency other than Bitcoin, like Ethereum or DIFX Token, is called an altcoin.
Type of cryptocurrency that follows the price of another asset like fiat currencies (e.g. US dollar) or precious metals (e.g. gold). Unlike other cryptocurrencies, stablecoins are less volatile and tend to keep their price within a close range of the underlying asset.
Tether (USDT) is currently one of the top stablecoins in the market and is pegged to the US dollar. If you check its price history, you’ll see that its price has stayed close to $1 at all times.
3. Privacy Coin
Privacy coins, like Monero, use privacy-preserving techniques to obscure transaction information from anyone except the two parties involved. With cryptocurrencies that run on a public blockchain, like Bitcoin or Ethereum, you can view the transaction history of the network by just knowing an address.
For example, in 2018, Vitalik Buterin, the founder of Ethereum, disclosed his address in a tweet. By just knowing this address, you can see its balance and transaction history.
A kind of cryptocurrency that has little or no value as it doesn’t provide any specific functionality.
Central Bank Digital Currency (CBDC)
CBDC is a type of digital money that is issued by a central bank or government. A CBDC is not a cryptocurrency, however, the concept received much attraction from major governments and central banks after the boom of cryptocurrencies.
European Central Bank, for instance, is planning to launch the Digital Euro, its own CBDC.
6. Utility token
Utility tokens usually serve various purposes within a specific application or platform. For example, DIFX Token is a utility token within the DIFX exchange and offers multiple benefits such as discounts and staking opportunities.
7. Governance Token
Kind of cryptocurrency that allows users to take part in the platform governance by voting. Token holders gain the right to vote based on the amount their willing to invest.
8. Security Token
A security on a blockchain network is called a security token and acts exactly like its real-life counterpart. Blockchain Capital (BCap) is a good example of a security token.
A security is a tradable financial instrument, like stocks or bonds. With the growth of blockchain technology, some companies decided to issue their stakes on a blockchain as well.
9. Wrapped Token
Remember how stablecoins are pegged to another fiat currency like the US dollar? Wrapped tokens are the same but they’re pegged to another cryptocurrency, instead of dollar or gold.
For example, Wrapped Bitcoin (WBTC) runs on the Ethereum blockchain and follows the price of Bitcoin.
10. Meme Token
Type of cryptocurrency that is created based on internet memes and is mostly community-driven. Dogecoin and Shiba Inu are two examples of meme coins.
Memecoins may experience sharp price movements so it’s recommended to seek professional advice before any investment.
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Please note that trading cryptocurrencies may carry a high level of risk. It’s recommended to always seek professional advice before any investment and only investment the amount you can afford to lose.
DIFX is a CEX that uses blockchain technology to incorporate centralized finance. It is an easy-to-use platform for both new and experienced traders, establishments, and investors. As covered by Cointelegraph, BeInCrypto, and many other media outlets, DIFX allows users to nominate anyone from their family, friends, or loved ones and allows them to legitimize their claim upon the primary user’s demise.
Additionally, the company hopes to increase the use of digital currencies for direct settlement between beneficiary and payer by eliminating intermediaries. To begin your journey with Endless Possibilities, download the app now from the iOS or Google Play Store, or visit us at difx.com.