In the early 2010s, one could count the number of cryptocurrencies by hand. However, there are now more than 19 000 digital coins, exemplifying the astronomical growth of this financial instrument.
Broadly speaking, we have two types of cryptocurrencies; those built using their own blockchain (e.g., Bitcoin, Ethereum, Solana, BNB Beacon Chain, etc.) and all the rest created using some of these blockchains (often referred to as tokens).
Some experts classify digital currencies as either Bitcoin or altcoins. The latter realm can be divided even further as many of these are utility tokens with specific purposes such as making payments, rewarding storage miners, rewarding content creators, and providing governance power.
Moreover, some of the tokens can serve more than one role, depending on the platform. We will discuss all of these in more detail and show you their sector dominance as per the latest data from CryptoSlate.
Needless to say, Bitcoin is the ‘OG’ of all cryptocurrencies and alone accounts for almost 40% of the industry’s market value. The project was launched in January 2009 by a pseudonymous and mysterious group or individual named Satoshi Nakamoto.
Bitcoin is the first example of an entirely decentralized digital currency traded peer-to-peer without oversight from a recognized financial body. Of course, it wasn’t too long before its popularity triggered the launch of thousands of cryptocurrencies known as altcoins.
Altcoins (‘alt’ meaning alternative) are all coins other than Bitcoin, which account for close to 60% of the entire market. Such cryptocurrencies are highly versatile in their usage, with numerous sub-sections that we’ll dive into further here.
Moreover, several altcoins will fall into more than one of these categories simultaneously.
Smart contract coins (24.72% dominance)
This is one of the largest sectors of cryptocurrencies generally. A smart contract is a self-executing contract that autonomously fulfills a defined operation when certain conditions are met as per pre-coded rules.
Cryptocurrencies with smart contract functionality tend to revolve around building applications or infrastructure such as a lending platform, an exchange, an NFT marketplace, etc.
Such tokens act as a payment system to compensate computer operators for carrying out certain tasks on a blockchain network. Regardless, altcoins in this field belong to second-generation blockchains built to use cryptocurrencies beyond facilitating a medium of exchange.
Ethereum is, of course, the most prevalent in this regard. However, other ones consist of Solana, Cardano, Tron, EOS, Internet Computer, and countless others.
Stablecoins (10.39% dominance)
A stablecoin is a digital currency pegged on a 1:1 ratio to another asset (usually a fiat currency like the US dollar) to maintain a stable, volatility-free value. While stablecoins are widely used as payment vehicles, they are also crucial for liquidity purposes or for investors who still want to hold their money in crypto without using a traditional digital currency.
Some of the most well-known in this class include USDT (Tether), USDC (USD Coin), DAI (Dai), and the list goes on.
DeFi coins (6.59% dominance)
DeFi, or decentralized finance, is a blockchain-based form of finance carrying out processes without relying on any intermediary like a broker, bank, or exchange. Crypto lending platforms, decentralized exchanges, and NFT marketplaces are some of the numerous illustrations of DeFi.
Most transactions in DeFi are done using Ethereum. However, other big players in this ever-growing space are Terra, Uniswap, Aave, Maker, Avalanche, etc.
Exchange coins (5.94% dominance)
A niche sector of the industry, exchange coins are utility tokens on centralized exchanges that provide numerous perks to their holders, such as reduced trading fees, voting power, and other exclusive benefits on their respective platforms.
BNB Coin (for Binance), Cronos (for Crypto.com), UNI (for Uniswap), and FTT (for FTX) are just a couple of the well-established exchange utility cryptocurrencies.
Content creation coins (2.34% dominance)
These are cryptocurrencies used as a reward on content-focused platforms. Instances of such content include social media, gambling, video streaming, advertising, gaming, and most recently, virtual worlds or metaverses.
Chiliz, Basic Attention Token, Theta, TRON, The Sandbox, and Decentraland are some well-known examples in this category.
Interoperability coins (2.16% dominance)
Coins in this category are part of third-generation blockchains, most notably Polkadot and Cosmos. These platforms foster interoperability or the ability for different, unrelated blockchains to link with another and transfer data without any barriers.
Payment coins (2.05% dominance)
These cryptocurrencies facilitate a medium of exchange between different users—some like XRP (Ripple) and XLM (Stellar Lumens) process payments primarily for financial institutions.
Prominent examples of this coin class comprise Bitcoin, Litecoin, Bitcoin Cash, and Dogecoin, to name a few. Although any cryptocurrency can facilitate payments, the ones we’ve mentioned were built explicitly for this purpose.
Meme coins (1.82% dominance)
A meme coin is a cryptocurrency based on an internet meme, pop culture reference, online community, or even an influencer. Such tokens are built not to be taken too seriously, but this doesn’t necessarily mean they don’t have some utility in their respective ecosystems.
Dogecoin (the first meme token) and Shiba Inu are the two most prominent, but several other meme coins exist as well.
Privacy coins (0.66% dominance)
These are payment-focused cryptocurrencies with zero-knowledge proof or similar privacy-enhancing technologies to anonymize their transactions. Monero, Zcash, Dash, Verge, and Pirate Chain are some of the most popular cases of privacy coins.
Storage coins (0.5% dominance)
A storage token provides a monetary incentive for those with unused disk space to offer decentralized cloud storage on a dedicated marketplace. These include Filecoin (the largest), Arweave, Sia, Ankr, Storj, etc.
It’s worth noting that the divisions of altcoins we’ve provided are not exhaustive; we’ve only attempted to give the most common versions you’ll often come across. Nonetheless, at this stage, you should be familiar that while there are primarily two kinds of coins, cryptocurrencies are highly versatile and form part of niche groups.
Thanks to blockchain technology, these digital assets have evolved from being an anonymous payment method to facilitating operations beyond most people’s wildest imaginations.