Six Types of Crypto Except Bitcoin That May Change the Future
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Blockchain has a great impact on the future. For example, the Bitcoin network, which has a great impact on the financial system.
With the development of Ethereum, there are more applications of the Blockchain technology, which allows users to set up smart contracts to carry out trustless transactions or build up D-Apps.
Digital money is not the only use of cryptocurrency. There will be more and more crypto projects that may benefit our life. In this article, we will classify them according to their usages.
What is Cryptocurrency?
Cryptocurrency is decentralized digital money. Its creation and management are controlled by cryptography. The underlying technology behind cryptocurrencies is Blockchain, which is a data storage technology that prevents anyone from changing the data stored on the Blockchain.
The main difference between cryptocurrency and fiat is decentralization. There is no authority or centralized server to manage and verify the transactions of the cryptocurrency.
Instead, they are run by thousands of computers distributed around the world. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger, the Blockchain.
As the meaning, transaction cryptocurrencies are mainly used to settle the payment. Some transaction cryptocurrencies try to compete with cash, while others focus on payments for a specific use case or industry.
More and more transactions are carried out through the internet, like ecommerce. In a traditional online transaction, an intermediate is required to verify the transactions and manage the account in order to secure the safety of the assets. The transaction records are not open to the public, which means if the server is hacked, the transaction data may be changed easily.
But with the transaction cryptocurrencies, trustless transfer can be carried out without any intermediate to verify the transactions. As many features like define, transfer, record and secure transactions are verified by network nodes through cryptography and recorded on the Blockchain, which can not be changed by any party easily.
In order to maintain the stability, the price of some transaction cryptocurrencies are pegged to some traditional assets like USD. So that users can carry out transactions without facing the risk of price shaking.
In some crypto cases, issuing De-Fi cryptocurrencies is an effective way of fundraising. For the holders of those financial cryptocurrencies, they may enjoy several rights including governance, staking and profit-sharing.
It is similar to the concept of stocks in the traditional financial market. But issuing De-Fi cryptocurrencies is a more effective way of fundraising with a relatively lower entry barrier, without going through different intermediaries like investment banks.
If you have invested in a De-Fi cryptocurrency issued by a Dex (decentralized exchange) like UNI which is the token of Uniswap, a DEX based on Ethereum. you may have the voting right to influence the future of it, including setting up policy.
Platform cryptocurrencies are used to pay for the computing system to run programs on the Blockchain network.
Take Ethereum as an example, “Gas” is the pricing system of Ethereum. Gas is used to measure how much computational resources like electricity are spent on operating the task you require, like oil in the real world.
Ether (ETH) is like the fiat currency used to purchase gas. In order to secure the running of smart contracts like software or D-App on the Ethereum Blockchain, you have to purchase gas by paying ETH to the “miners” who are providing computational resources like hardware and electricity.
There are many Blockchain platforms with different use cases. Each of them have their own platform for cryptocurrency.
Similar to platform cryptocurrencies, service cryptocurrencies are used to pay for some specific services provided by a Blockchain network, usually thousands of computers distributed around the world.
For both personal or enterprise, the consumers of the services provided by a Blockchain network. The value of the service cryptocurrencies depends on the value of the services, network fees and rewards offerings.
Like Filecoin, which is a decentralized, peer-to-peer digital storage crypto project based on Blockchain technology. It allows users around the globe to rent out spare hard disk space for data storage. If you want to purchase the data storage service of Filecoin, you have to pay the FIL tokens to those who rent out the hard disk space.
Media cryptocurrencies may change the ecosystem of traditional social media. At the age of web2.0, KOLs, stars, idols create content like posts, articles, photos or videos on Instagram or Facebook…for free. The contents have brought in billions of advertising revenue for Meta every year.
But Meta has never paid for the content creators. As a result, content creators have to do a lot of side hustle to earn a living, like selling other products or advertising for different businesses. They can not focus on creating content.
Media cryptocurrencies, like Basic Attention Token, aim to create a more fair social media ecosystem. It is created as a reward to the content creators who bring value to the users.
Example: Basic Attention Token (BAT)
You may earn entertainment cryptocurrencies while you are doing something for leisure, which can be exchanged for fiat on the market.
Play-to-Earn (P2E) and Move-to-Earn (M2E) are examples of entertainment cryptocurrencies. The greatest feature of P2E and M2E is allowing users to earn crypto and non-fungible tokens (NFTs) that can be transacted on the market, so that they can make money while entertaining.
In a P2E game, gamers can make money through completing specific missions, holding and transacting in-game assets like virtual land, skins or weapons or contributing to the ecosystem of the game.
Disclaimer: All products and projects listed on this article are not endorsements, and are provided for informational purposes only.
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