Crypto Assets

Cryptocurrencies are digital assets that rely on cryptography to encrypt financial transactions, regulate the production of new units, and verify asset transfers. Cryptocurrencies are built on decentralized networks that use distributed ledger technology to operate. A blockchain is typically used as a digital transaction ledger.

There are various types of coins and tokens hidden behind the word "digital assets," each with its own meaning and functionality.

Types of Crypto Assets

Coins

Coins have their own blockchain to build on. All transactions must be checked, which necessitates mining. We may distinguish between coins that are based on the bitcoin blockchain and coins that are based on their own blockchain.

Stable Coin

Coins that are backed up by another currency, such as FIAT money like the US dollar. It may, however, be an exchange-traded asset, such as gold. These coins are made to withstand market fluctuations better, since they are backed by assets that fluctuate outside of the cryptocurrency room.

Privacy Coin

Term used to describe tokens and coins that are the most safe in terms of privacy. We often use criteria like transaction privacy, balance visibility, and address privacy to determine if a token belongs in the privacy token group.

Token

Tokens vary from coins in that they do not have their own blockchain and therefore cannot be mined. They may be an asset, a utility, or a monetary unit. Today, Ethereum is the network with the most tokens.

Under Token, there are still different types

• Utility Token

Tokens are used to fund a project by assuring customers that they will be able to use the project's service/product. A token is similar to a ticket for an event or a gift card in that it has a single use and is only valid for a limited period of time and in a specific location. It does not give the project or the organization any ownership rights.

• Security Token

It is a tradable financial asset represented by a token (companies shares, bonds, debts,...). They have a monetary value that is derived from an external commodity. These tokens can be used to make investments. Security tokens are a digital version of conventional securities that must be registered with a regulatory body.

• Equity Token

The stock or equity in the company that issued it is represented by this symbol. By buying equity tokens, you are making an investment in a business and gaining ownership of a portion of it. Safety tokens are identical to equity tokens.

• Payment Token

Tokens with a one-of-a-kind purpose: to be used to pay for goods and services. Payment tokens are produced in real time and can be used in predefined domains and payment environments online.

As a result, tokenized payments allow sensitive data (credit card information) to be replaced with a token type of money during a payment process. They improve the security of the transaction.

• Non Fungible Token

Each unit has its own set of attributes and characteristics, making it a unique type of token. Each token's inner value is unique, and they can't be divided: you can't own 0,24 of an NFT. Similar to collectibles like stamps: they're all the same thing, but some are more important than others.

Thoughts

It's fun and delicious to have so many Tokens, but don't be fooled! Act wisely, keep vigilant about the coin or token you're purchasing, ask questions of the team, and don't purchase too many scoops at once to avoid getting sick.