Types of cryptocurrencies and their differences

Cryptocurrency is a digital or virtual currency that uses cryptography to secure transactions and control the creation of new units. It operates on blockchain technology, which provides decentralization and transparency of transactions. Since the emergence of Bitcoin in 2009, the cryptocurrency market has expanded significantly, and today there are all types of cryptocurrencies, from payment coins to unique digital assets. In this article, we will look at the types of cryptocurrencies and their differences to help readers better understand this dynamically developing sector. According to CoinMarketCap, there are more than 18,000,000 cryptocurrencies on the market, and in recent days their number has increased by about 25,000, each of which has its own characteristics and purpose. We will analyse the main types of cryptocurrencies, their classification, differences and examples so that you can navigate this diversity.

Main types of cryptocurrencies

Cryptocurrencies can be divided into several categories depending on their structure and goals. Let's consider the main types of crypto: Bitcoin, altcoins, tokens and meme-coins.

Bitcoin

Bitcoin is the first and most well-known cryptocurrency, created in 2009 under the pseudonym Satoshi Nakamoto. It was designed as a decentralized digital currency for peer-to-peer transactions without the involvement of intermediaries such as banks. Bitcoin is often referred to as "digital gold" due to its limited supply (21 million coins) and ability to store value.

Main characteristics of Bitcoin:

• Uses a Proof-of-Work (PoW) consensus mechanism, which requires computing resources for mining.

• High market cap: around $1.2 trillion (June 2025).

• It is used as a medium of exchange and an investment asset.

Bitcoin remains the benchmark for other cryptocurrencies, but its functionality is limited compared to newer projects.

Altcoins

Altcoins are any cryptocurrency other than Bitcoin, which expands the concept of types of cryptocurrency. The term comes from the words "alternative coin". Altcoins are created to solve various problems, such as improving transaction speed, implementing smart contracts, or ensuring price stability.

There are several subcategories among the types of altcoins:

• Platform coins: used to create decentralized applications (DApps) and smart contracts. An example is Ethereum (ETH), a platform for developing DeFi projects and tokens. Ethereum supports more than 120 thousand tokens.

• Payment coins: focus on fast and cheap transactions. For example, Litecoin (LTC) offers faster transaction confirmations compared to Bitcoin.

• Stablecoins: Cryptocurrencies that are pegged to stable assets like the US dollar to minimize volatility. Popular examples include Tether (USDT) and USD Coin (USDC), which maintain a stable value around $1.

Altcoins make up about 40% of the cryptocurrency market by capitalization, demonstrating their importance.

Tokens

Tokens are digital assets built on existing blockchains such as Ethereum, Binance Smart Chain, and others using smart contracts. Unlike coins, tokens do not have their own blockchain, making them more flexible for various applications.

Token types:

• Utility tokens: Grant access to products or services. For example, Basic Attention Token (BAT) is used in the Brave browser to reward users for viewing ads.

• Security tokens: Represent a stake in an asset, such as a company or real estate, and are subject to regulation.

• Non-fungible tokens (NFTs): Unique assets that represent ownership of digital objects, such as art or collectibles. An example is CryptoPunks, one of the first NFT collections.

Tokens play a key role in the DeFi (decentralized finance) ecosystem, providing functionality for many projects.

Meme Coins

Meme coins are cryptocurrencies that originate from internet memes or jokes, but often gain popularity due to community support. Examples include Dogecoin (DOGE) and Shiba Inu (SHIB). These types of coins are highly volatile and speculative, but their market capitalization can reach billions of dollars.

Differences between types of cryptocurrencies

Types of cryptocurrencies and their value depend on their technical characteristics, purposes and market demand. The main differences include:

• Blockchain: Coins like Bitcoin and Ethereum have their own blockchains, while tokens use the infrastructure of other networks.

• Purpose: Bitcoin is used for payments and investments, altcoins offer additional features such as smart contracts, and tokens can represent assets or access to services.

• Volatility: Stablecoins are designed for stability, while Bitcoin, altcoins, and memecoins are subject to significant price fluctuations.

• Uniqueness: NFTs are unique and non-fungible, unlike other cryptocurrencies which are fungible.

These differences make different types of cryptocurrencies suitable for different purposes, from investment to use in decentralized applications.

Examples of cryptocurrencies

Below are examples of popular cryptocurrencies for each category:

• Bitcoin (BTC): market cap is about $1.2 trillion, price is about $107,000 (June 2025). It is used as a store of value and payment.

• Ethereum (ETH): a smart contract platform with a market cap of about $400 billion and a price of $2,400. Supports many tokens and dApps.

• Tether (USDT): a stablecoin pegged to the US dollar with a market cap of around $80 billion. Used for stable transactions.

• Basic Attention Token (BAT): Utility token for the Brave advertising ecosystem, market cap is around $2 billion.

• CryptoPunks: A collection of NFTs representing unique digital images, one of the most expensive on the market.

• Dogecoin (DOGE): a meme coin with a market cap of around $20 billion, popular due to the support of communities and celebrities.

Conclusion

Cryptocurrencies are a diverse asset class that includes many types of cryptocurrencies, each with their own unique characteristics. From Bitcoin, which laid the foundations of the industry, to innovative tokens and stablecoins, they continue to transform the financial landscape. Understanding the types of cryptocurrencies and their differences allows investors and users to make informed decisions in this rapidly evolving sector.

For more information about cryptocurrencies, you can check out other articles on our site, such as about stablecoins or NFTs.

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