No, not every digital currency powered by blockchain falls under the same umbrella.
The cryptocurrency universe is as diverse as the real universe, which we define as the
‘totality of existence’.
Regardless of whether a person is a cryptocurrency backer or not, mainstream media’s coverage
of crypto space has made terms like non-fungible tokens and metaverse a part of family dinner
conversations.
The diversity within the cryptocurrency world must be studied to make informed investment
decisions.
NFTs are definitely a wild craze, but they are definitely not cryptocurrencies, which
are ‘fungible’ tokens.
Here are some key crypto project categories and the most prominent players in each category.
1.
Bitcoin
Bitcoin is undeniably a category in itself.
Most of us know that any blockchain-based digital currency that is not Bitcoin is an
alternative coin or altcoin.
Bitcoin’s recent price is nearly at US$65,000.
This is more than double the price at the start of 2021.
But the interesting aspect is that constituents of other categories have given better returns
than Bitcoin.
2.
Decentralized Finance (DeFi)
DeFi can be understood as a facilitator that liberalizes financial assets and frees them
from the clutches of intermediaries like banking institutions.
DeFi is an emerging technology in finance with little or no regulatory supervision.
The following DeFi projects have had a great year in 2021.
3.
non-fungible token (NFT)
You might think that NFT is an easy-to-understand category, but it is not.
Within it, there are a lot of sub-categories that include NFTs like Beeple’s Everydays
and CryptoPunks, NFT exchanges like OpenSea, NFT minting platforms like SuperRare, and
NFT gaming platforms like Axie Infinity.
An artwork is not an NFT unless the ownership is recorded on blockchain.
This ownership record makes a CryptoPunk or Bored Apes character an NFT.
OpenSea is a marketplace for NFTs where original creators and subsequent owners can list their
NFTs to find patronage.
Decentraland, which allows users to own parcels of land as NFT, is another blockchain-based
game.
4.
Metaverse
Metaverse is a virtual reality space where users can create and sell digital tokens.
It is a fictional world, which may or may not have blockchain links.
Recently, tech giant Facebook’s entry in the metaverse category has lifted the status
of metaverse coins.
5.
Ethereum
Ethereum also makes a separate category within cryptocurrencies, thanks to its wide adoption.
Ether, the linked token of Ethereum is second only to Bitcoin by market cap.
While Bitcoin is a typical blockchain-based digital currency, Ethereum is a network that
allows smart contracts to be built on it.
Ether serves as the native currency of Ethereum’s blockchain and is used for payment of fees
by users.