Classes of digital currencies

Classes of digital currencies

By Tash356 | T4sh356 | 13 May 2020


Cryptocurrency is a generic term it can be used to refer to a digital currency or a class of digital currencies. Currently there more than 5k cryptocurrencies out there and each one of them can fall in one of seven classes give or take. 

These classes are:

1. Cryptocurrencies 

These are payment tokens that are meant to act as a medium of exchange. Examples include Bitcoin -BTC, Litecoin-LTC, AfroDex-AfroX, Monero, Digital Cash- Dash, ​ZIMBOCASH​​​ - ZASH,  Zerocoin, GRIN etc

2. Utility tokens

Tokens that are used to pay for a particular good or service produced by the token issuer. Examples include Basic Attention Token - BAT for watching ads and paying content creators who use brave browser, Golem- GNT, FUNFAIR-FUN to play casino games, Filecoin-FIL to pay for cloud storage space etc

3. Platform/blockhain tokens

These are currencies for blockchain platforms upon which decentralised applications (Dapps) can be build.  Every blockchain has it own token like Ethereum- ETH, Tron-TRX Qnode Coin-QNC, EOS, Cardano, Stellar-XLM

4. Natural asset tokens 

These are tokens that represents natural assets which are already tradeable in already existing markets eg gold; water, air, silver, caborn etc.

Examples include Sub Contract for solar energy and Earth Token.

5. Stable coins

These are tokens developed to deal with price volatility of cryptocurrencies. They make use of valuable assets for backing. In short, these are asset backed digital currencies.

Stablecoins can be backed by:

a. Fiat money

Make use of fiat money to back the value of these currencies.

Examples 

Tether - USDT, USD Coin - USDC and Paxos - PAX all these three are equal to 1 USD each 

1 Centus = 1c USD. Any valuable national currency can be used to back stablecoins.

b. Basket/Weighed Currencies

These are tokens that are backed by a group of financial instruments like loans and bank deposits

c. Commodity 

These tokens are backed by valuable commodities like diamond, gold or silver.

Examples include Digi Gold Token - 1 DGX = 1 Gram of Gold and Tether Gold 1 XAUT = 1 Troy of Gold.

6. Security tokens

Are tokens for identical, tradeable, financial instruments that have an intrinsic monetary value.  They are built on top of a blockchain platform like Bitcoin or Tron. Security tokens may be created for both tangible and intangible financial assets and are built to represent part or full ownership of assets like houses, land, shares, bonds, copyrights and mobile vehicles, to mention a few.

7. Crypto Collectibles

These are tokens that differ such that one is different from the other.  They differ in size, colour, value based on how their owners treat them.

An example of such is cryptokitties which differ in size, colour, age and value among other things

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Tash356
Tash356

I am a crypto enthusiast .


T4sh356
T4sh356

Blockchain and Crypto related material.

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