The different categories of cryptocurrency

The term "cryptocurrency" seems a bit broad, doesn't it? I'm sure there are a ton of people out there who don't know that there are different "categories" of cryptocurrency. Trust me, they're not all the same.

The term cryptocurrency does an excellent job of highlighting the attributes of some coins, but it certainly doesn't capture the true essence of every coin out there. So let's break it down. Let's look at the different categories of cryptocurrency.

"Currency" Cryptocurrency

This is the one that everybody knows about. Bitcoin and Litecoin fall into this category. Currency cryptocurrency serves as a unit to be exchanged and a store of value, much like real-world dollars. Keep in mind that Currency cryptocurrency is only as valuable as people make it. Right now, Bitcoin is very valuable indeed.

"Utility" Cryptocurrency

Utility cryptocurrency creates an infrastructure that can be built upon. One popular example of a Utility cryptocurrency is Filecoin. Filecoin gives developers unique ways to retrieve and store data by creating a decentralized storage network. Another example of a utility cryptocurrency is Ethereum, which allows developers to create smart contracts.

"Platform/App" Cryptocurrency

As the name suggests, Platform/App cryptocurrency is a cryptocurrency version of an app or platform that's built on top of a "Utility" cryptocurrency. Take Augur for example which has been built upon Ethereum. The result is a decentralized outcome market. Let's say you place a bet on the next super bowl. If your prediction is correct, you make a profit.

Don't let the "currency" in "cryptocurrency" fool you into thinking that every coin out there operates like Bitcoin because quite frankly they don't. Each category of coins has their own incentive alignment, structures, and unique technologies.

Thanks so much for posting this, I didn't know half of it! Really interesting and it just goes to show how much I still have to learn!

I believe that "platform/app" cryptocurrency is inherently "utility" cryptocurrency, and thus "currency" cryptocurrency--because its use cases make for reliable value storage over time.

That said, I expect the cream to rise to the top. The most valuable cryptocurrencies will be those that PROVIDE the most value to others in the form of utility.

I'd rank your three categories in the following way, @batmanlive2002--though I think some groups are subsets of others:

  1. "Platform/App" >> 2. "Utility" >> 3. "Currency"

Anyone care to agree or disagree? 🙂

@batmanlive2002 excellent article, and I totally agree, right now here in my country is going through a strong situation and a great way out of this is the use of crypto coins, I think you have to keep learning and teaching.

@rafroldan said in The different categories of cryptocurrency:

@batmanlive2002 excellent article, and I totally agree, right now here in my country is going through a strong situation and a great way out of this is the use of crypto coins, I think you have to keep learning and teaching.

Continuous growth and progress is key.. 👍 There's a TON to be learned about cryptocurrencies and the blockchain. Which country do you live in, @rafroldan?

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