The world of cryptocurrency has grown significantly over the last few years. There are many different coins and tokens that cover a ton of different functions but there are five that comprise the most popular cryptos at the moment. It’s a very intimidating space with so much information to absorb, so to make it a little bit easier we’ll go over those top five here.

Digital Cash

It only makes sense to start with the most widely known type of cryptocurrency. Digital cash is an attempt to create a widely accepted and decentralized method of payment. Without a middleman or bank managing the transfer of funds there are often fewer fees involved and more transparency in the process as most information is public in the ledger.

Bitcoin is by far the largest example of digital cash and has grown more than anyone really expected. Creator Satoshi Nakamoto envisioned a fully peer-to-peer electronic cash system that didn’t rely on a third party. This goal was achieved, but the network grew beyond what it could reasonably handle which resulted in higher fees and longer transaction times. As a result, there are many other projects aiming to create true digital cash with minimal fees and faster transaction times.

Examples of digital cash:

• Bitcoin

• Litecoin

• Dogecoin

• Bitcoin Cash

• NANO

Platforms

There are endless possibilities for blockchain and many of them are made possible by chains that function as a platform more than a currency. Smart contracts are the game-changers here; smart contracts dictate under what conditions coins and tokens can be transacted without third-party intervention.

Developers are able to utilize smart contract functionality to create decentralized apps, also known as dApps, on these platforms. The most popular are decentralized finance exchanges and DEXs, which I will cover a little bit later on. Games created on Ethereum are also starting to gain some traction, which opens up even more opportunities.

Although Ethereum is the top dog, it does suffer from network congestion which led to some looking to create a more efficient platform. This is where the Binance Smartchain comes in. Created by Binance and launched in late 2020, the platform has exploded and there are many dApps comparable to Ethereum’s platform with even more to come as developers look for a more sustainable network.

Examples of blockchain platforms:

• Ethereum

• Binance Smart Chain

• Cardano (Smart contract functionality coming later this year)

Privacy Coins

With the same idea of digital cash in mind, there exists another sector that focuses more on the privacy aspect of currency. We expect a certain level of confidentiality in our banking and real-world finances, so why not expect the same from our cryptocurrencies? Privacy coins aim to offer varying levels of anonymity and confidentiality with what we spend the coins on. For the most part, they function the same as digital cash, but hide many of the transaction details from the eyes of the public.

Monero, currently the top privacy coin, functions as a digital cash blockchain that obfuscates the transaction data to hide the anonymity of both parties involved. And while many are a currency, there are some that aim to provide privacy-oriented platforms for smart contracts like Secret Network. Fundamentally, Secret Network can be compared to the Ethereum blockchain except it uses a few different methods to provide totally private and secure dApps.

Example of privacy coins:

• Monero

• Secret Network

• Zcash

• Dash

Stablecoins

The instability of the value of regular cryptocurrency can be seen as a negative mark for it, so there are some coins that aim to create stable avenues of digital cash. Stablecoins are pegged to actual fiat currencies so their value doesn’t necessarily change except when that currency itself gains or loses value. Stablecoins have a host of different applications and more commonly can be used to trade for tokens or coins that otherwise don’t have a fiat trading pair.

Tether, while a little controversial, is currently the largest network of stablecoins offering coins pegged to the US Dollar, Euros, and the Chinese Yuan.

Examples of stablecoins

• Tether

• USD Coin

• Dai

Decentralized Exchange Tokens

Although digging into decentralized exchanges, DEXs, is beyond the scope of this post it’s hard to not mention them here since popularity has skyrocketed. They allow for peer-to-peer transactions and are often a way to get tokens before they are formally listed on centralized exchanges.

Uniswap is the most popular one by far. Built on the Ethereum platform it offers the ability to exchange any Ethereum-based tokens for one another. The biggest drawback of using it is the transaction fees related to Eth. Smart contracts often come with a heftier transaction price tag, too.

Generally, the tokens that belong to the DEX are governance tokens. They allow users to vote on development decisions for the platform among other things.

Although most are built on Ethereum, the Binance Smart Chain has seen growth. Developers took to Binance to try to take advantage of the lower fees associated with the blockchain. PancakeSwap is the most popular Binance Smart Chain DEX right now.

Examples of DEXs:

• Uniswap

• SushiSwap

• PancakeSwap

• 1inch (Although this is a DEX aggregator rather than a true exchange)

Keep in mind that these are only a handful of the many different cryptocurrency sectors. These ones all have value to add to the space and many of them can simultaneously be part of different sectors. You can find a token for almost anything you can think of in cryptocurrency and that’s part of what makes the space so interesting! There is always more to learn about crypto.