Types of cryptocurrencies

#DEFI# #NFT# #元宇宙# As cryptocurrencies become increasingly popular, more and more investors are starting to pay attention to the overview of the cryptocurrency market. Topics such as introductions to mainstream cryptocurrencies, blockchain technology applications, and emerging crypto trends have become hot topics. Exploring this world of digital asset diversity requires not only understanding virtual currency investment strategies, but also identifying the potential and risks of various coins. Let’s take a deep dive into these areas to provide more value for your investment decisions.

Bitcoin and Ethereum, as the leaders of the global cryptocurrency market, occupy an absolute dominant position. Bitcoin, as the first blockchain application, attracts institutional investors and individual holders with its decentralized nature and limited supply. Ethereum, on the other hand, has become the infrastructure for building decentralized applications through smart contract technology, spawning numerous ecosystem projects. According to cryptocurrency data website CoinMarketCap, there are currently more than 9,000 cryptocurrencies in circulation, with mainstream coins including Bitcoin Cash, Litecoin, and Ripple, each serving specific functions in different scenarios. Bitcoin Cash offers faster transaction confirmation, Litecoin focuses on payment convenience, and Ripple aims to improve cross-border remittance efficiency. The common features of these mainstream cryptocurrencies are mature technical foundations, ample market liquidity, and well-developed ecosystem applications, making them the first choice for investors entering the crypto market.

Emerging cryptocurrencies represent the cutting edge of blockchain technology applications, including various forms such as DeFi tokens, GameFi tokens, and governance tokens. DeFi tokens like Uniswap and Aave are reshaping traditional financial services through decentralized financial protocols, offering lending, trading, and liquidity mining mechanisms. GameFi tokens combine gamification with financial incentives, allowing players to earn crypto asset rewards during gameplay. Governance tokens grant holders decision-making power in decentralized autonomous organizations (DAO)—the more tokens held, the greater the voting power. Although these emerging cryptocurrencies are relatively more volatile, their innovative business models and application scenarios showcase the diversified development direction of blockchain technology. For example, the APE token issued by the Bored Ape Yacht Club serves as both a game token and a governance token, and has established its own APE Chain public chain ecosystem, reflecting the composite value characteristics of emerging cryptocurrencies.

Stablecoins, as critical infrastructure in the cryptocurrency market, are mainly divided into fiat-collateralized and crypto-collateralized types. USD-pegged stablecoins such as Tether and USDC use equivalent fiat reserves to guarantee price stability, providing investors with hedging tools and transaction settlement intermediaries. Within the DeFi ecosystem, stablecoin applications are even more diverse, supporting lending protocols, trading platforms, and derivatives trading. DeFi tokens like Compound, Aave, and Curve use smart contracts to automate financial services; users can deposit crypto assets into liquidity pools for returns or use over-collateralization mechanisms to borrow. The following table compares the core features of stablecoins and DeFi tokens:

The combination of stablecoins and DeFi has become the fundamental architecture of the digital financial ecosystem, attracting traditional financial institutions to explore blockchain technology applications.

Non-fungible tokens (NFTs) use blockchain technology to achieve the uniqueness and ownership verification of virtual assets, with application scenarios spanning digital art, in-game items, virtual real estate, and collectibles. Unlike cryptocurrencies, NFTs represent the unique value of individual assets and are not interchangeable. Each NFT has a unique data record and transfer history. The Bored Ape Yacht Club (BAYC) series NFTs demonstrate the potential of the virtual asset market—single NFTs have traded for over $1.2 million, proving the value accumulation capability of virtual assets under community consensus. The metaverse ecosystem is built on the foundation of NFTs and cryptocurrencies, enabling users to purchase land, trade items, and participate in economic activities in virtual worlds, with blockchain fully ensuring ownership and liquidity of virtual assets. The diverse development of virtual currencies presents investors with more complex asset allocation decisions, requiring a deep understanding of the technical fundamentals and application scenarios of various tokens, and careful judgment after evaluating risk and return characteristics.

This article provides an in-depth exploration of the different types of cryptocurrencies and their roles in modern digital finance. It first analyzes mainstream cryptocurrencies such as Bitcoin and Ethereum, revealing their technical foundations and market influence. Next, it introduces the innovations of emerging cryptocurrencies, including the applications of DeFi and GameFi tokens. It then explains the importance of stablecoins and DeFi in transaction settlement and smart contracts. The article also explores the future potential of NFTs and the metaverse, offering an analytical framework for investors. Suitable for those seeking cryptocurrency investment opportunities and technology developers.