Types of cryptocurrency

As of March 2022, there are over 18,000 types of cryptocurrency. 

The list comprises various coins and tokens which form part of the overall cryptocurrency market cap. 

These cryptocurrencies can be categorized under different categories. 

If you are new in blockchain technology and cryptocurrency, you can start from the basics of blockchain technology, history of blockchain technology, smart contracts and what is cryptocurrency. 

Before I continue, let’s differentiate between Altcoins and Tokens. 

Altcoins and tokens 

Altcoins are coins that were considered alternatives to bitcoin which means every other cryptocurrency apart from bitcoin. 

Bitcoin being the first cryptocurrency maintains its name while every other cryptocurrencies are regarded as alternatives to bitcoin. 

Altcoin was coined after the launch of different cryptocurrencies such as the Namecoin, Litecoin which were hard-forked from bitcoin blockchain to solve transaction fee and finality issues. 

Tokens, under general classification are also classified as altcoin but with a difference. 

Tokens are digital representations of a particular asset or utility on a blockchain. 

Altcoins when compared to tokens are different because tokens are built on an existing blockchain. 

Sometimes they are referred to as Layer-2 coins while any cryptocurrency with its own blockchain other than bitcoin falls under altcoin. 

Ether is the native coin of Ethereum blockchain while every other cryptocurrency built on the Ethereum blockchain are tokens. 

Types of cryptocurrency

Utility token 

This refers to all cryptocurrency that provide access to certain products or services that are provided by the issuer. 

Example of these tokens is Basic Attention Token which comes as a reward for using the brave browser. 

It should be noted that utility tokens can be issued as a reward for using a product or service. 

Security token 

These are cryptocurrency that are issued in exchange for a stock or an external asset. 

They represent a stake, voting rights or rights to dividend in the assets represented. 

Examples are Bcap (Blockchain capital), Science blockchain. 

Payment token

These are cryptocurrencies that perform the basic function of money, that is, using them as a medium of exchange. 

Majority of all cryptocurrency falls under this category but not all cryptocurrency are used for payment. 

Stablecoin

This is a special Kind of cryptocurrency that is built to solve the problem of volatility. 

Unlike other cryptocurrencies, they have stable value and are backed by other assets. 

There are stablecoins that are backed by fiat, other crypto assets and precious metals such as gold. 

Examples are USDT, USDC, XAUT etc. 

Exchange tokens

There is still misconception about these types of cryptocurrency because they derived their name as a result of being issued by an exchange. 

Examples are BNB, UNI, KCS etc. 

Writer’s corner

It should be noted that cryptocurrencies can fall under 2 or more categories based on the use case. 

Also shitcoin is a general name for cryptocurrency that has no immediate purpose for which it was created while Memecoins refer to cryptocurrencies that are depicted with conical or animated memes. Mostly internet memes. 

About Kumo

Kumo, registered as Kumo Technologies Inc in Delaware, U.S. is a fiat and crypto social payment app which allows users to exchange fiat (NGN) to crypto, save and earn interest in dollar with as low as $5, utility payment such as DSTV subscription, airtime, data among others.

Kumo wallet is your all-in-one social payment app for seamless payment solutions.

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