Introduction: Cryptocurrencies are regarded as one of the most valuable assets of modern times, and they are capable of generating more profits than conventional assets like Real estate and Gold. This has led to the recent decades being named the Bitcoin Era by investors around the world.
There are thousands of cryptocurrencies in the market, and most of them are not profitable at all. Investors must research different types of crypto assets and invest in crypto assets that align with their goals and values.
Let us talk about the different types of crypto assets in the market. Cryptocurrencies are classified into several types based on parameters, such as their values and volatility. 6 major classifications deserve an explanation, and we shall delve into them one by one.
Different Types of Stablecoins
The first one on the list is Stablecoins, which are very non-volatile as its name suggests. These cryptocurrencies are linked to the values of stable assets. These assets include Gold, National currencies, oil, and other valuables.
Their rates change in relevance with the change in the price of the stable assets. Stablecoins have been brought into existence to bring some sort of consistency and legitimization into the crypto industry.
There are several benefits to a stablecoin. The most major one of them is its ability to convert into assets that they are linked to instead of fiat currency. Investors can turn their stablecoins into real assets as soon as volatility hits the crypto market.
A type of crypto asset that deserves mention among the different classifications is blockchain platforms. The likes of Ethereum belong to this classification. Ethereum is not the actual cryptocurrency that can help investors make transactions.
Ethereum refers to the whole network powered by the cryptocurrency Ether. Ethereum has been designed to execute smart contracts, which consists of the infrastructure of projects such as Ethereum on Azure, powered by Microsoft.
These coins are mildly volatile but are capable of providing the highest profit margins in the market.
Another significant classification is called Private Coins. A common misconception related to transactions dealing with Bitcoins and similar coins is that they provide full anonymity. However, that is not the case, and Bitcoins transactions are only pseudo-anonymous.
All Bitcoin transactions are recorded in a public ledger, which can be decoded with a little bit of effort. Once this ledger is accessed, Bitcoin transaction records can point towards the parties involved in the transaction.
Examples of Private Coins include Zcash and Monero, which come with all the qualities of Bitcoin, with added anonymity.
Utility tokens are very useful and make up a crucial classification of crypto assets. The most common and widely available example of a utility token would be a BAT (Basic Attention Token). Utility tokens are not meant for investments and are meant to be exchanged. They are exchanged for products of a specific company.
Another crypto asset that represents the value of real-world assets is Tokenized Assets. A tokenized asset acts as a token of ownership of a real model asset. For example, consider the case of a piece of land, which is divided into areas with specific dimensions.
A tokenized asset will contain information regarding the ownership of these areas on a smart contract if you own any.
The main benefit of a tokenized asset is the ease with which it can be liquidized. Moreover, it is also hard to modify owner information on such a token, which adds security to the asset.
Security tokens are actual securities in a digital form, which are stored on the blockchain, and are similar to shares, which entitle you to certain rights.
All the different crypto assets mentioned above have different pros and cons. Therefore, they are utilized for diverse purposes. However, the most popular crypto asset of all time is Bitcoin. The growth and valuation of Bitcoin are such that the recent decades are often referred to as the https://bitcoin-revolutionapp.com/.
Investors need to understand that different assets perform differently. However, if one asset is not performing well, it does not mean that the rest will follow suit. There are many other types of crypto assets as well. However, in addition to these 6 deserve to be mentioned, they find the most use.