Around 13 years ago, when Bitcoin (BTC) was born, there were no digital currencies and cryptocurrencies on the market — only BTC at the time. In today’s cryptocurrency industry, you’ll see that there are 17,600 digital currencies available. While the overall numbers are staggering, in reality, we can divide them into different types based on usage and application.

If you’re interested in delving into the cryptocurrency space and want to see how many cryptocurrencies there are, you can start with the four most common digital currencies in the market below.

The four most common cryptocurrencies on the market today

The cryptocurrency market consists of digital currencies, assets, items, memes or joke coins. Let’s start with the main type – money.

1. Currency

This is probably the type of cryptocurrency you will encounter most often in the market. Currencies are cryptocurrencies designed for practical applications , the prime example of which is Bitcoin. Satoshi Nakamoto created BTC to facilitate direct payments and remittances, eliminating the need for third parties and intermediaries.

Bitcoin also paved the way for people to use financial services without providing private information. Therefore, it is believed that digital currencies such as BTC are suitable for remittances, transfers and payments. While everyone knows that currency is volatile, it is considered a good store of value.

This is why many people in countries with dire economic conditions turn to Bitcoin as a safe haven.

Due to the volatility of digital currencies, many people also make profits by buying and selling digital currencies, or engage in other income-earning activities. Thousands of exchanges and markets are popping up, making it easier to start trading.

It is also worth noting that digital currencies are not issued by, nor regulated or backed by, any central authority such as banks and other financial institutions, but rather use distributed ledger systems or blockchains that run on specialized computers and software Generated.

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2. Asset

If you were to look at the definition of the term “asset” from a financial perspective, you would see that an asset is any resource that can be converted into cash and represents the value of ownership. An asset can also be defined as anything that can be used to generate positive economic value.

In the cryptocurrency space, stablecoins are considered assets. This is because the value of these tokens is derived from the value of another asset . Let’s take Tether (USDT) as an example. Tether is a digital asset that is pegged 1 to 1 to fiat currencies such as the U.S. dollar (USD). Tether is 100% backed by reserves such as traditional currencies, cash equivalents and other underlying assets of the platform.

An asset like Tether is called a stablecoin because of its ability to provide a stable value or price. As a result, many cryptocurrency traders, investors, enthusiasts, and business practitioners are turning to assets like USDT in pursuit of low-volatility solutions in the cryptocurrency market.

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3. Object

Items are probably the least common on this list of cryptocurrency types. But on the other hand, you must have come across a lot of tokens of this type in the cryptocurrency space. Cryptocurrency item types are designed to support special projects that work on solving the world’s difficult problems.

For example Siacoin (SC), Terra (LUNA) and Decentraland (MANA) etc. Siacoin is the utility coin for Sia — a blockchain-based decentralized distributed cloud storage platform that aims to “create a more robust and affordable data storage marketplace than traditional cloud storage providers.” In a nutshell, it works to solve the problem of expensive cloud storage.

And Terra (LUNA) aims to bring decentralized finance (DeFi) closer to the masses. Another good example of an item is Decentraland’s MANA. According to its website, Decentraland is the first fully decentralized world controlled through a Decentralized Autonomous Organization (DAO). MANA can be used to pay for lands and game items in Decentraland, where users can connect with others, trade digital assets, and explore virtual worlds.

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4. Meme or joke coin

As the name suggests, a meme or joke coin is a cryptocurrency with no specific purpose or goal . These tokens are mostly based on internet memes, jokes on social media or funny internet personalities. Examples include Dogecoin (DOGE) and Shiba Inucoin (SHIB).

One of the reasons for the growing popularity of meme coins is the attention, endorsement effect, and fear of missing out (FOMO) of different communities in the network. The supply of meme or joke coins is also large, such as SHIB’s token limit is one trillion trillion, and DOGE has no supply cap. So you can buy thousands or even millions of meme or joke coins for just $1.

However, many cryptocurrency enthusiasts and pundits see memes or joke coins as high-risk assets . The value of meme coins often depends on the activity or participation of the community, which can eventually lead to pump and dumps. Furthermore, such tokens can also collapse at any time and eventually lose value.

In addition to this, the crypto rugby scam (a scheme to trick users into donating or investing in a fraudulent product) is also prevalent in memes and joke coins. Because of these potential risks, many cryptocurrency enthusiasts do not recommend buying meme or joke coins. In fact, many experts in the industry are strongly against investing in such tokens.

If you’re considering trying out these tokens, you might want to consider these comments before taking action. Remember, it is best to invest your hard-earned money in assets that are less risky and free from all kinds of financial scams.

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Which type of cryptocurrency should I invest in?

When it comes to choosing which cryptocurrency to invest in, we are faced with many choices. Thousands of new tokens are constantly flooding the market, which can cause a lot of confusion for newbies. While some newer coins have made a name for themselves in the space, nothing is as tried and tested as Bitcoin.

Bitcoin continues to develop real-world use cases for sending and receiving funds, wealth preservation, and philanthropy, proving time and time again that it is the world’s leading cryptocurrency. Not only has it been around for the longest time (allowing you to join a community of its multi-year users), but its use has been steadily growing.

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