There are over 700 types of cryptocurrencies in the world and growing. Many hit exchanges and disappear, while others seem to stick around for a while. There is no one size fits all cryptocurrency and nothing is guaranteed. Though we do have some really great tips on what may help you decide which ones might be good for you.
Cryptocurrencies can be separated into different groups. Let us look at some of them in detail.
Stable Coins
Stable coins are meant to be a currency that is pegged or backed by another currency. A good example of this would be Tether, which claims to have 1 USD per tether coin. This makes it much more predictable and easy for businesses to accept as it gives them the security they could expect from using fiat money but also allows them to use the advantages of crypto. The biggest flaw with stable coins is that they rely on other outside forces to maintain their value and this can be a huge risk.
A second factor to look at would be if there is enough volume in the market for it which will make it an appealing choice for investors. Another important aspect would be whether or not it is decentralized or if it is centralized. This would be important because if it has some sort of authority managing the coin, this may not go over so well with many investors.
Payment Currencies
These currencies are used for transactions and usually, their value tends to remain relatively stable so they can be used for purchases without having to worry about the price fluctuating too much.
Aspects that may help you decide which ones might be good for you would include understanding what the coin is trying to achieve. What it is being used for at present and if that is likely to change. Who are the people using it? How many are typically needed or used for transactions? Is there a minimum transaction amount and if so, why was this chosen? Understanding what you will be getting into and having realistic expectations can help you decide which ones may be good for you.
Pure Cryptocurrencies
These are cryptocurrencies that are not linked to anything else. They can be traded for other currencies on Bitcoin Evolution, used as investments and the value is determined by the market trading them. Some of these crypto-currencies may try to act like shares due to their limited supply but they do still function very differently from stocks or shares which can make things complicated if you do not understand how it works.
Bitcoin was the first pure cryptocurrency and others have modeled themselves after it often making alterations to suit some purpose or design more appropriate for their vision. Some examples of these would be Namecoin, Litecoin, Auroracoin, among others.
Utility Tokens
These are also cryptocurrencies but they can be used as a voucher for accessing products or services. They may be used as part of the overall business process and not an end in itself which makes it different from some other types of crypto-currencies. These cryptocurrencies can be traded on exchanges the same as most other types of crypto-currencies.
Final Remarks
Cryptocurrencies can be complicated but it does not have to be. Just take your time and make sure you understand what you are getting yourself into before making any decisions.
There are several different types of cryptocurrencies to choose from and it is important to do your own research before making a decision to invest or trade. Be sure to know what you will be getting into and have realistic expectations going in. This can help you decide which ones you may want to look at more closely.
