Many people do not know what types of digital currencies exist and what their uses are.
In this article, I summarized the difference between digital currencies.
And what are their uses
1. Major Cryptocurrencies
- The most well-known and established coins in the cryptocurrency market.
- Examples:
- Bitcoin (BTC): The first and most valuable digital currency, used as a store of value.
- Ethereum (ETH): Used to run smart contracts and decentralized applications (DApps).
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2. **Meme Coins:**
- Coins inspired by jokes or internet pop culture.
- Examples:
- **Dogecoin (DOGE)**: Started as a joke but gained significant popularity.
- **Shiba Inu (SHIB)**: Inspired by Dogecoin and known as the "Dogecoin killer."
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3. **Stablecoins:**
- Coins linked to the value of a stable asset (like the US dollar or gold) to reduce volatility.
- Examples:
- **Tether (USDT)**: Pegged to the US dollar.
- **USD Coin (USDC)**: Another stablecoin backed by the dollar.
- **DAI**: A decentralized stablecoin based on Ethereum.
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4. **Privacy Coins:**
- Focuses on providing privacy and obscuring transaction details.
- Examples:
- **Monero (XMR)**: Used to hide the identities of the sender, receiver, and amount.
- **Zcash (ZEC)**: Offers advanced privacy options.
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5. **Utility Tokens:**
- Used to access specific services or platforms.
- Examples:
- **Binance Coin (BNB)**: Used on the Binance platform to pay fees and participate in projects.
- **Chainlink (LINK)**: Used to provide external data to smart contracts.
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6. **Governance Tokens:**
- Gives its holders voting rights on decisions related to a project or platform.
- Examples:
- **Uniswap (UNI)**: Gives its holders voting rights on Uniswap platform updates.
- **Aave (AAVE)**: Used to vote on changes to the Aave protocol.
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7. **DeFi Tokens:**
- Linked to decentralized finance (DeFi) projects aimed at recreating traditional financial services without intermediaries.
- Examples:
- **Compound (COMP)**: Used in the lending and borrowing protocol.
- **Maker (MKR)**: Used in the management of the DAI stablecoin.
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8. **Gaming & NFT Tokens:**
- Used in blockchain-based games or for buying and selling non-fungible tokens (NFTs).
- Examples:
- **Axie Infinity (AXS)**: Used in the Axie Infinity game.
- **Enjin Coin (ENJ)**: Used to create and manage NFTs.
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9. **Central Bank Digital Currencies (CBDCs):**
- Digital currencies issued by central banks of countries.
- Examples:
- **Digital Chinese Yuan (e-CNY)**.
- **Digital Euro** (in development).
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10. **Layer 1 Coins:**
- Coins based on independent blockchain networks that support other applications.
- Examples:
- **Solana (SOL)**.
- **Cardano (ADA)**.
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11. **Layer 2 Coins:**
- Works to improve the efficiency of Layer 1 networks (like Ethereum).
- Examples:
- **Polygon (MATIC)**.
- **Optimism (OP)**.
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12. **Storage & Infrastructure Tokens:**
- Used in data storage projects or blockchain infrastructure.
- Examples:
- **Filecoin (FIL)**: For decentralized data storage.
- **Helium (HNT)**: For decentralized wireless communication networks.
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### 13. **Exchange Tokens:**
- Issued by trading platforms to provide benefits such as reduced fees.
- Examples:
- **Binance Coin (BNB)**.
- **Crypto.com Coin (CRO)**.
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### 14. **New Project Coins (Altcoins):**
- Any digital currency other than Bitcoin is called an "altcoin" (alternative coin).
- Examples:
- **Litecoin (LTC)**.
- **Ripple (XRP)**.
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### 15. **Charity Tokens:**
- Used to support charitable or social causes.
- Examples:
- **GiveToken (GIVE)**.
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### Conclusion: Digital currencies are very diverse and serve different purposes, from decentralized finance to gaming and privacy.
Before investing in any currency, it is important to understand its purpose and the technology behind it.
Okay, if you have questions, write them in the comments and I will respond to everyone.