The world of cryptocurrencies can be overwhelming. Since the appearance of Bitcoin in 2008, the number of available cryptocurrencies has grown to far exceed 10,000, too many to keep count, and practically any person, company or group can launch their own cryptocurrency with astonishing ease.
Different types of cryptocurrencies
But cryptocurrencies are not a lawless territory impossible to sort, as different cryptos can be grouped into categories that make their classification much easier.
There are many ways to classify cryptos by groups and a coin can fit into one or more, but there are fixed groups that users use on a daily basis. These are the main ones.
Altcoins
Altcoins (alternative coins) belong to a very broad category: all those cryptos that are not Bitcoin. Although it may seem like an overly extensive classification, it is necessary due to Bitcoin's dominance over the market, since it is convenient to separate the most popular crypto from the rest.
Generally, the term altcoin is used to refer to the most used cryptocurrencies after Bitcoin and not to all that exist, since there are too many; Ethereum, Solana, Ripple...that is, those with a large enough market.
A term widely used within the world of cryptocurrencies is “alt season” which refers to the season of this type of cryptocurrency. Generally, after a substantial Bitcoin price increase, users expect an alt season to occur, in which these coins will increase in value in the slipstream of BTC.
Stablecoins
Stablecoins are very important currencies within the crypto ecosystem and have a specific use. They are designed to maintain a price as constant as possiblegenerally one dollar, which they achieve by being backed (at least in theory) by fiat money reserves.
The most important are UDST and UDSC, which are used to avoid having to constantly sell for fiat money and to protect against market fluctuations.
utility tokens
Utility tokens are cryptocurrencies that have a use within a specific platform beyond their monetary value. That is to say, that They have a utility beyond their selling price.
A good example of this type of crypto is BNB, the cryptocurrency of the Binance exchange. Although it can be bought and sold like a normal crypto, it has specific uses within Binance such as paying commissions, using decentralized apps, etc.
Governance tokens
Governance tokens, or government tokens, They are an expression of the crypto ideal of democracy and plurality. They are used to vote and make decisions within a crypto project, generally related to the implementation of new functionalities.
The more of these tokens one has, the more weight a user's decision has, in a way similar to the actions of a traditional company. An example of this type of token is UNI, the crypto of Uniswap, a decentralized exchange.
meme coins
Meme coins are cryptocurrencies that are born from memes, viral moments or famous people. The best known is Dogecoin, but there are thousands: Pepe, Fart and even Hawk Tuah's crypto.
These types of cryptos represent the most chaotic, speculative and volatile side of the market. Some have increased in value dramatically in just a few hours and it is not uncommon for them to have lost everything shortly after.
These types of cryptos are pure speculation and they almost reach the level of betting, so it is advisable to think twice before investing a single euro in them.
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