When it comes to crypto, it seems like there is a never ending list of assets. It can be exhausting and sometimes intimidating to dive into. Here is a short list of cryptocurrency types:
- Coins: These are stand alone digital assets that are native to its own blockchain. Bitcoin and Ethereum are the most well-known cryptocurrency coins. Bitcoin and Ethereum both have their own set of rules and protocols and run on their own network. In simpler terms, Bitcoin and Ethereum are trains that cannot share the same tracks but can swap your train ticket for one or the other.
- Stablecoins: Stablecoins get their name because their value remains stable. To maintain their value they are pegged to a particular fiat asset, such as the US Dollar. Popular stablecoins include USDC, BUSD, Tether and Dai.
- CBCDs: These are Central Bank Digital Currencies. Basically, the centralized government attempting to participate in the cryptocurrency world. These currencies are backed by the Federal Reserve in the US, the Bank of England in the UK, People’s Bank of China, and the Bank of Canada. CBCDs are at a very early stage, so much so that there has only been discussions around launching these assets and no release dates have been announced (as of writing this Jan. 2023).
Tokens: There are a ton of different types of tokens, but at a high level, these are digital assets that are built on top of an existing blockchain. Let's stick with the train example: the Ethereum blockchain hosts many different types of tokens or trains that are defined as “ERC”. The most well known examples are ERC-20 tokens widely seen in initial coin offerings and ERC-721 (these are NFTs!).