What Are the Different Types of Cryptocurrencies?

  • There are more than 10,000 cryptocurrencies in 2022.
  • A crypto coin is native to a network; there is only one coin per network.
  • A crypto token is built under a crypto coin’s network: there can be an infinite number of tokens per network.
  • The four types of blockchains are: public, private, consortium and permissioned.
  • Bitcoin and Ethereum are the world’s most popular crypto coins.
  • ERC-20 is the standard token type issued on the Ethereum network.
  • Stablecoins peg their price to a referenced asset such as a fiat currency or a commodity.

Blockchain is the underlying technology that allows cryptocurrencies to exist. These digital assets use cryptography to verify and validate transactions.  

Cryptocurrencies can be divided and subdivided into numerous categories. To best understand the cryptocurrency ecosystem, let’s start by looking at a top-down visual.

types of cryptocurrency

How Many Different Cryptocurrencies Are There?

Cryptocurrencies fall into numerous categories, including native coins, tokens, and stablecoins. The current market cap of all cryptocurrencies is currently over 1 trillion dollars.

So how many cryptocurrencies are there?

There are currently more than 10,000 cryptocurrencies in existence. Of these 10,000, only about 2,700 have any measurable market cap. Of these 2,700 coins/tokens, only about half have a market cap of over one million.

It is important to note that most cryptocurrencies have no value at all. Before investing, it is therefore vital to understand what utility your coin has if any. 

The majority of cryptocurrencies fall into the “token” category. So, what are cryptocurrency tokens, and how do they differ from coins? Let’s find out next! 

New to cryptocurrency? Read our new crypto glossary here!


Learn how to trade cryptocurrency in our guide for beginners

The ongoing rise of cryptocurrency has been marked by high volatility, which makes it ideal for trading. As a trader, you can get exposure to these cryptocurrencies:*

  • Bitcoin (BTC/USD)
  • Micro Bitcoin (/MBT)
  • Bitcoin Cash
  • ether
  • Dogecoin
  • Basic Attention Token

  • EOS.IO
  • Compound
  • Enjin Coin
  • Kyber Network
  • Litecoin
  • Maker

  • OMG Network
  • 0x
  • Uniswap
  • Paxos Gold
  • Polkadot
  • Stellar
  • Chainlink

* You can trade the CME Bitcoin and Micro Bitcoin futures contract with tastytrade – the other cryptocurrencies listed here are the actual coin.

cryptocurrency market capital

Crypto Coins vs Tokens: What’s the Difference?

The nomenclature in the crypto community can often be confusing. It is not uncommon for all cryptocurrencies to be referred to as “coins”. Technically, this is not true. There are fundamental differences that separate coins from tokens:

CRYPTO COINS

  • A cryptocurrency coin is native to a blockchain. 
  • Coins use consensus mechanisms to verify and validate transactions.
  • The purpose of most coins is to create a cryptographically secure medium of exchange. 
  • There is only one coin per blockchain network.

CRYPTO TOKENS

  • Tokens do not need a consensus mechanism as they rely upon the security of the underlying coin.
  • The purpose of a token is to allow users to vote on changes and interact with a decentralized application.
  • There can be an infinite number of tokens per cryptocurrency coin.
  • UniSwap (UNI) and Aave (AAVE) are two popular Ethereum based tokens. 
coins vs tokens

What Are ERC-20 Tokens & How Do They Work?

The most popular protocol for creating tokens is the Ethereum network. Tokens created on the Ethereum network are called “ERC-20” tokens.

The ERC-20 token is the standard because these types of tokens allow interoperability within the Ethereum ecosystem - all ERC-20 tokens can easily be exchanged for one another, which greatly improves liquidity.  

ERC-20 tokens are fungible. This means that they are not unique and can be interchanged freely, sort of like how one US dollar is as good as the next. This contrasts with an ERC-721 token (NFT), which is not interchangeable.  

Utility vs Governance Tokens

The two most popular types of ERC-20 tokens include utility and governance tokens.  

In decentralized finance (DeFi), utility tokens are issued to finance a new protocol. The issuance of a new utility token is called an "ICO", or an initial coin offering. Perhaps a less confusing term for this would be “ITO”, initial token offering.   

A governance token is a special kind of utility token. These tokens allow their owners to vote on proposed changes to a network, sort of like how a proxy allows shareholders to vote on corporate changes.  

4 Types of Blockchains

In 2022, there are hundreds of different blockchain networks. Blockchain networks generally fall into one of four categories: 

Public 

Private 

Consortium

Permissioned 

Most of the blockchains you have heard of (Bitcoin and Ethereum) fall into the public category. Public means decentralized, and decentralized means transparent.  

Let’s now explore five popular public cryptocurrency coins. We will look at 5 popular tokens after this. 

What Are Stablecoins and How Do They Work?

Stablecoins are a rather unique type of cryptocurrency. Though they are called stable “coins”, they are in reality tokens.  A stablecoin pegs its price to a referenced asset. There are four predominant types of stablecoins: 

 FIAT-BACKED  

Fiat-backed stablecoins peg their price to the value of a fiat currency. The most popular fiat-backed stablecoins are pegged to the US dollar. Issuers of stablecoins generally hold an equivalent amount of US reserves in a vault. If $1 million worth of US dollars is held in a vault, that issuer can mint $1 million worth of stablecoins. These tokens are growing in popularity because of their high-yield nature when compared to traditional savings accounts.  

CRYPTO-BACKED 

Crypto-backed stablecoins are backed by - you guessed it - cryptocurrency. Instead of relying on a central issuer (like fiat-backed stablecoins), crypto-backed stablecoins secure their reserves via smart contracts. Crypto-backed stablecoins are generally overcollateralized to make up for the volatility in cryptocurrencies. 

COMMODITY-BACKED 

Commodity-backed stablecoins are collateralized with actual commodities. Gold, oil, and real estate are three popular varieties of commodity-backed stablecoins. These types of stablecoins help to democratize commodity investing. 

ALGORITHMIC 

Algorithmic (algo) stablecoins are backed by algorithms or simple math. Not holding 1:1 actual reserves introduces many risks to algo coins. The collapse of the Terra blockchain showed the inherent risks in these types of coins. 

Let’s next look at five of the most popular stablecoins. All of these coins are fiat-backed US dollar stablecoins. 

What Are Meme Coins and How Do They Work?

A meme coin is a cryptocurrency that has its origin in a meme. A meme is basically a humorous video or image shared on the internet. Meme coins started as a joke with Dogecoin, but they have since exploded in popularity. Meme coins have little to no value.

How to Trade Cryptocurrency

  1. Learn how cryptocurrency markets work
  2. Create a tastytrade account or log in
  3. Enable cryptocurrency trading
  4. Create a trading plan and manage your risk 
  5. Pick a type of cryptocurrency to trade
  6. Open, monitor and close your first position  

Find out how to place a crypto order

Types of Cryptocurrencies Summed Up

  • Only about a quarter of all cryptocurrencies have and true market cap.
  • A crypto coin acts as the native currency for a blockchain.
  • A crypto token operates under a blockchain.
  • Two popular token types are utility and government.
  • The most popular stablecoins track the US dollar and hold reserves in a vault.
  • Most meme coins have no value at all.

Learn more about crypto and blockchain over the years


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