7 Important Types of Cryptocurrency Development

At the start of 2020, the size of the global cryptocurrency market was worth $1.49 billion. But it is expected to reach $4.94 billion by 2030, growing at a compound annual growth rate (CAGR) of 12.8 percent. The numbers show that there is a huge amount of room for growth in the space. But the key to making money on this market is to get in at the right time with the right kind of cryptocurrency. So, before you start working on cryptocurrency development, you should learn more about how different types of cryptocurrencies work.

Let's discuss the types of Cryptocurrency!

1) Utility Tokens

A cryptocurrency utility token is a special kind of token that helps pay for the project. Initial Coin Offerings (ICOs) are how cryptocurrency projects sell their utility tokens to investors. By having these tokens, the person who owns them can use a product or service that the token's creator offers. Basic Attention Token (BAT), an ERC20 token that lets people use services from the BAT project, is an example of a utility token.

The payment tokens are an example of a type of utility tokens. The people who own tokens use them to buy and sell goods and services on the platform. Before you start making your own cryptocurrency, you should know that not all utility tokens can be used as payment tokens. Monero, Ethereum, and other things are all kinds of payment tokens.

Tasks that use utility tokens:

• The price of the utility tokens can't go up on its own.
• Most utility tokens have problems with liquidity.
• If the project doesn't work, the token's value goes down, too.

Also Read This: 5 Top Cryptocurrency Payment Gateways to Look For

2) Tokens for security

The only difference between security tokens and other tokens is that security tokens are linked to traditional security. That means they are used to tokenize things like bonds, stocks, real estate, and more that are used in traditional finance. The STOs or security token offerings are how the token issuer gives out these security tokens. You can further divide the security tokens into equity tokens and asset-backed tokens.

3) Exchange Tokens

Exchange tokens are the native tokens of crypto exchanges. They are used on exchanges to buy, sell, or swap other tokens or to pay gas fees. When people hold or use exchange tokens, they often get cheaper gas fees, more liquidity, discounts on trading, and voting rights. One of the most popular exchange tokens is BNB, or Binance Coin.

4) Non-fungible Tokens

An NFT, which stands for "non-fungible token," is a digital token that proves you own a rare and unique item. They are the newest thing to happen with cryptocurrencies. NFTs are also based on blockchain technology, but they are mostly used to represent things like photos, audio files, videos, collectibles, and more. Bored Ape (BAYC), CryptoKitties, and other things are examples of NFTs.

5) DeFi Tokens

Decentralized Applications, or dApps, are financial apps that are built on blockchain to help with things like lending and borrowing. Each decentralised app is run by a token economy that is powered by the app's own token. During the crypto exchange platform development, this native token is a type of programmable money that is controlled by smart contract codes.

There are a few blockchains, like Ethereum, Polygon, Cardano, Solano, IOTA, Tron, and more, that make it possible to make DeFi tokens. With DeFi tokens, dApp users can lend, borrow, earn interest, buy insurance, trade on the DeFi exchanges, and do a lot of other financial things.

6) Stablecoins

These are crypto coins with stable prices, as the name suggests. These are backed by fiat money, gold, or some other precious metal, and their prices are set to match. For instance, USDT is a stablecoin backed by USD, so its price stays close to $1. These have the same value as cryptocurrencies, but the prices don't change as much.

7) Asset-backed Tokens

Asset-backed tokens are a type of cryptocurrency token that is backed by real-world assets like stocks, gold, fiat currency, or precious metals. ETOs, which stands for Equity Tokens Offering, are used to give out these tokens.

8) Privacy tokens

The idea behind these privacy tokens is to give users more privacy than coins like Bitcoin. Some users want to make their blockchain transactions more private, and there are many ways to do this. Monero, Zcash, Dash, and Verge are a few of the most well-known cryptocurrencies for privacy. These can be made private by default, or users can choose to turn on and off the privacy features.

Wrapping it up

The development of tokens or coins in the blockchain space has a lot of room for growth. But the use case behind it, the technology that will be used, the blockchain that will be used, and the type of token that will be made are all important to the success of any token or coin.