As there are over four thousand cryptocurrencies, it is not easy to understand the cryptocurrency universe. Even reading the definition of each may take days.
What are the differences between these cryptocurrencies? And what are the similarities? I thought the answers to these questions might help see the big picture in the crypto world.
Based on this idea, I decided to segment the top 50 cryptocurrencies. Why the top 50? Because cryptocurrencies need to be examined to determine which segment they will be in. I thought that a segmentation over the top 50 could give a general idea of the crypto world. Thus, top 50 cryptocurrency accounts for 92% of the total crypto market value.
Segmentation, which means separating into groups, is a frequently used method to identify customers and provide better service to them in banking. Here, the purpose of separating cryptocurrencies into groups is to get to know them better.
I haven't used any clustering algorithms to create segments since they don't perform well on segmentation problems. Although I used several sources stated at the end of the post, some segments reflect my personal opinion. Therefore, I do not claim certainty; someone else can form different groups from a different perspective.
I specified the segments over the value proposition, and the cryptos with similar promises have been involved in related groups.
In this segment, Bitcoin and co offer the best-known value proposition of the crypto world.
The value proposition of Bitcoin, Dogecoin, Bitcoin Cash, Litecoin, Bitcoin SV in this group are similar;
- A currency that can be safely stored in a digital environment
- Transfers worldwide 24/7
- The anonymity of personal information
- Decentralized, non-intermediary network
- Transactions are transparent and cannot be managed by a central authority
DeFi is short for “decentralized finance,” an umbrella term for various financial applications in cryptocurrency or blockchain. DeFi is a concept where financial products are available on a public decentralized blockchain network, making them open to anyone to use rather than going through an intermediary like banks or brokerages. DeFi is the hot concept of blockchain right now, and with 12 cryptocurrencies, it is one of the largest segments.
Many blockchain infrastructures are created for building contracts and tokens on top of them. The first and the most famous of these platforms is Ethereum. A bunch of platforms like Cardano, Neo, Eos emerged after Ethereum.
Platforms enable all kinds of assets and transactions to be digitized through smart contracts. It is possible to think of platforms as the operating systems running on a blockchain. On these platforms, non-centralized applications, contracts, and tokens can be created.
Protocols, Exchanges, Interoperability
These cryptos are the backbones that act as a bridge between currencies and blockchains. The group includes the protocols that enable the exchanges and different infrastructures to communicate with each other.
Binance Coin is the most popular crypto in this group. Besides having a wide DeFi ecosystem, it is the crypto that enables discounts of the Binance exchange.
Polkadot is another example, an open-source sharding multichain protocol that facilitates the cross-chain transfer of any data or asset types, thereby making a wide range of blockchains interoperable with each other.
The most popular crypto project for the finance sector is Ripple. Ripple ensures that the international fund transfer occurs with low commission rates, allowing transfers of national currencies.
Crypto.com Coin (CRO) is the native cryptocurrency token of Crypto.com Chain — a decentralized, open-source blockchain developed by the Crypto.com payment, trading, and financial services company.
Price stability coins are cryptocurrencies pledged to the US dollar or coins with their own price balancing mechanisms. Price volatility is therefore very low. Tether is still 5th among the coins. The other members of the group are USD Coin, Binance USD, and Dai.
Cryptocurrencies such as Theta, Tron, and Bittorent are grouped in the media segment.
Theta (THETA) is a blockchain-powered network built for video streaming.
Tron is an entertainment data platform. The platform enables content creators to create digital assets that can be freely exchanged. The platform uses blockchain technology and distributed storage to create a wholly distributed structure.
BitTorrent is a popular peer-to-peer (P2P) file sharing and torrent platform which has become increasingly decentralized in recent years.
Monero is one of the most popular privacy coins launched as a Bytecoin's fork. Many coins offer a variety of privacy features. Monero was created from the beginning by focusing on privacy. Thanks to features such as secret addresses and closed-circuit signatures.
The other members of the group are Dash, Decred, Zcash.
Internet Of Things
IOTA focuses on securely communicating devices connected to the internet. For this purpose, it uses tangle instead of the blockchain, and it creates a network instead of a chain for executing operations. In this way, it can reach a very high transaction speed and work with meager transaction rates. Because of its originality, I thought it would be appropriate to consider IOTA under a separate segment.
You can see the list of the top 50 cryptocurrencies and segments below. The market value figures and rankings are as of 26.04.2020
The summary of the list is shown below.
As shown in the table, 'Currency/payments' and 'Platforms' segments dominate the financial terms with Bitcoin and Ethereum. On the other hand, as blockchain technology matures, I suspect that other use segments will get bigger.
I segmented 50 cryptocurrencies on 24.08.2018 for the first time. Below are the results of that segmentation study.
I noticed that the total market value of the first 50 cryptos had increased about 9 times in nearly 3 years. Bitcoin and co. Segment (Pure Currency or Currency/Payments segment) dominance is down about 7 percent.
There were no DeFi projects in the first 50 coins 3 years ago. With 12 coins and %4.5 shares, they are notable members of the crypto universe right now.
In the leadership of Binance Coin, the 'Protocols, Exchanges, Interoperability' segment has gained a remarkable share. 'Stability Coins' also seem to gain shares with the support of DeFi.
3 years ago, some opinion leaders were debating whether blockchain-based systems would be permanent. Nowadays, we are confident that cryptocurrencies will be permanent and expect them to become mainstream in a couple of years.
Thanks for reading.
The Periodic Table of Cryptocurrencies
Fortune Business Insights - Cryptocurrency Market Report
DeFi Article By Investopedia
Coinmarketcap.com Cryptocurrency Categories
Coinmarketcap.com Coin List
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