Exploring the different types of cryptocurrencies: From Bitcoin to altcoins and stablecoins
Discover the main types of cryptocurrencies—Bitcoin, altcoins, and stablecoins—their uses, benefits, and impact on the evolving digital economy.
Cryptocurrencies have forever transformed the financial market, introducing new possibilities that weren’t previously available with fiat money. This is one reason that made digital coins stand out from the rest, increase in popularity and drove an increase in cryptocurrency prices. Additionally, this has led to a significant variety in the digital space, with numerous types of cryptocurrencies for investors to consider. Among the most important ones are Bitcoin, followed by altcoins and stablecoins.
Bitcoin is the pioneer of the crypto space, which is why this digital asset falls into no category, but it is one of a kind. Then, there are a variety of altcoins, which are digital coins that serve as alternatives to Bitcoin. Among the most popular altcoins are Ethereum (ETH), Cardano (ADA), Solana (SOL), and Ripple (XRP). Then, there are also stablecoins, which have been created to mitigate the volatile nature of digital coins to some extent. And they manage this by having their value pegged to fiat currencies, such as the US dollar and the Euro. Tether (USDT) is the most popular stablecoin.
Now, we can see how different asset types influence each other with the help of crypto trading pairs. You can find these asset combinations on crypto exchanges, letting you trade one digital coin against the other. There are two types of assets in this combination, represented by the base currency and the quote currency. Among all the crypto trading pairs available, one that traders use on a larger scale is the BTCUSDT trading pair.
This trading pair is highly popular because Bitcoin is a highly volatile asset, and people can better protect themselves against this volatility by converting their BTC into USDT. Then, when the BTC shows moments of recovery, BTC owners can convert their USDT into BTC. In this way, investors worldwide are better equipped to handle the volatile nature of digital coins.
In this article, we will discuss the various asset types that exist in the cryptocurrency landscape, with a focus on Bitcoin, altcoins, and stablecoins. Keep reading.
Bitcoin: The crypto pioneer
Bitcoin is the first digital currency ever developed, beginning its journey to the world in 2009. Since then, it has had a remarkable trajectory, marked by numerous ups and downs. Bitcoin has gained significant popularity, earning the nickname "digital gold." This is amazing to see, especially considering that Bitcoin had quite humble beginnings, and initially, only tech enthusiasts were interested in it. Additionally, at first, the value of BTC was negligible, but it has since skyrocketed in value.
The primary feature of Bitcoin is that it is a decentralized asset, meaning no one, including banks or governments, has access to it. This was exactly the desire of Satoshi Nakamoto, the creator of Bitcoin, whose identity remains unknown. This makes Bitcoin respect its goal.
Bitcoin has a capped supply of 21 million digital coins, which adds scarcity and can also help increase the price. Bitcoin can also help individuals better prepare for inflation and economic instability, a valuable feature for a digital currency. Bitcoin has experienced significant growth, and this trend is likely to continue in the future.
Altcoins
Altcoins are the ones that have brought considerable diversity to the cryptocurrency realm. As their name suggests, these digital assets are alternative assets to Bitcoin. BTC has inspired them, but they have tried to solve its shortcomings. This is why these altcoins also represent good options. Although they don’t have the same big market capitalization as Bitcoin, they still have a vast number of supporters. Let’s take the example of Ethereum, which is the second-largest digital currency by market capitalization.
These altcoins possess a unique quality that attracts investors. For instance, Ethereum is an amazing blockchain platform that leverages smart contracts. XRP is also an altcoin with interesting features, particularly for those who require international transactions.
Other group categories from altcoins include meme coins, which differ from regular altcoins in that they are not characterized by technological innovations, but rather by their fun appeal, inspired by popular internet memes. Among the most popular meme coins are Dogecoin (DOGE) and Shiba Inu (SHIB). The community of these digital coins is the one that helps these assets reach new heights and keep these meme coins alive.
Stablecoins
Stablecoins are safer options in the cryptocurrency realm, whose value is pegged to a fiat currency, such as the US dollar. Tether is a good example of a stablecoin, whose value is pegged to the US dollar. Stablecoins are suitable for those who don’t have a high risk tolerance but want to participate in the crypto realm. Digital coins have a long list of advantages, including those that apply to the general cryptocurrencies.
So, they enable fast and borderless transactions. However, they also share characteristics with fiat money in that their value is stable.
Last remarks
The crypto space is an innovative ecosystem, home to many asset classes. Some of them include Bitcoin, altcoins and stablecoins. Diversification is crucial in crypto real estate to better prepare yourself against the risks associated with this space. This is why it can be a good idea to allocate a small portion of your portfolio to all these asset classes. In this way, even though one asset class doesn’t behave the way you expected, the other ones might not.
All asset classes have their own set of advantages and disadvantages, and it is essential to be aware of them to be better prepared for whatever may occur in the future.
