Types of Crypto

In one minute

• Two big buckets: Coins are the native asset of their own blockchain (BTC on Bitcoin, ETH on Ethereum). Tokens are issued on top of an existing blockchain (for example, an ERC-20 token on Ethereum).
• Common categories: payment coins, platform coins, stablecoins, utility tokens, governance tokens, exchange tokens, privacy coins, NFTs, oracle tokens, meme coins, gaming tokens, wrapped/bridged tokens.
• Key idea: Categories describe typical uses, not guarantees. One asset can fit more than one category, or change over time.

Reminder: This page is educational, not financial advice. Crypto carries risk. Never share your seed phrase.

Coins vs tokens

Coins (native assets)

• What: The built-in asset of a blockchain. Used to pay fees and secure the network.
• Examples: BTC (Bitcoin), ETH (Ethereum), SOL (Solana), ADA (Cardano).
• Creation: Issued by the protocol itself (e.g., mining in proof-of-work or staking rewards in proof-of-stake).
• Typical uses: Transaction fees (“gas”), staking/validating, store of value, medium of exchange.

Tokens (issued assets)

• What: Assets created by smart contracts on an existing blockchain.
• Standards: ERC-20 (fungible tokens on Ethereum), ERC-721 (NFTs), SPL (Solana), and others.
• Examples: USDC (stablecoin), UNI (governance), LINK (oracle/service token).
• Creation: “Minted” by a smart contract according to rules the issuer sets.
• Note: To move a token, you still need some of the chain’s native coin for gas (e.g., ETH for ERC-20s, SOL for SPL tokens).

Major categories (with examples)

1) Payment coins

Designed mainly for sending value peer-to-peer.

• Examples: Bitcoin (BTC), Litecoin (LTC).
• Pros: Simple mental model; strong focus on security and reliability.
• Trade-offs: Throughput and fee spikes can limit everyday spending during busy times.

2) Platform / smart-contract coins

Native assets of Layer 1 blockchains that host apps and smart contracts.

• Examples: Ethereum (ETH), Solana (SOL), Avalanche (AVAX).
• Pros: Big developer ecosystems; lots of wallets, tools, and apps.
• Trade-offs: Fees and speed vary; design choices affect decentralization and security.

3) Stablecoins

Aim to track a stable value (often 1 USD). Same shape as crypto, less price swing.

• Fiat-backed: Held by a company that says it keeps cash/treasuries (e.g., USDC, USDT).
• Crypto-backed: Over-collateralized with crypto (e.g., DAI).
• Algorithmic: Tries to hold a peg using code alone; historically risky.
• Risks: Reserve transparency, regulatory changes, de-pegs, smart-contract bugs.

4) Utility tokens

Provide access, discounts, or pay for services within a project or platform.

• Examples: Tokens used to pay protocol fees or unlock premium features.
• Note: “Utility” does not guarantee price appreciation or legal status.

5) Governance tokens

Let holders vote on protocol settings (fees, upgrades, treasury use).

• Examples: UNI, COMP and similar DAO tokens.
• Consider: How many tokens are concentrated with insiders? Is voting power actually used?

6) Exchange tokens

Issued by centralized or decentralized exchanges for fee discounts, rewards, or staking programs.

• Risks: Tied to the health of the issuing platform; terms can change.

7) Privacy coins

Use cryptography to hide sender, receiver, and/or amounts.

• Examples: Monero (XMR), Zcash (ZEC).
• Note: Some exchanges or regions restrict privacy coins due to regulations.

8) Oracle/service tokens

Support services that feed off-chain data into smart contracts (prices, weather, sports, etc.).

• Example: Chainlink (LINK) is commonly used to pay oracle networks for data.

9) NFTs (non-fungible tokens)

Unique tokens that represent individual items: art, tickets, memberships, in-game items.

• Key idea: The token proves ownership; the media file may be on-chain or referenced off-chain.

10) Meme & gaming tokens

Viral, community-driven assets or tokens tied to game economies.

• Watch for: Low liquidity, huge volatility, and unclear long-term utility.

11) Wrapped/bridged tokens

Represent an asset from another chain (e.g., wrapped BTC on Ethereum).

• Risks: Bridge smart-contract risk and custody risk if a third party holds the original asset.

How the categories differ (quick guide)

• Issuer & control: Protocol-level (coins) vs project-level (tokens).
• Use of fees: Native coins pay network gas; many tokens pay app-level fees or give perks.
• Security model: Coins help secure their chain (mining/staking). Tokens rely on the host chain’s security.
• Economic design: Supply schedule, inflation/deflation mechanisms, and how new issuance happens.
• Regulatory posture: Varies by country. The same label (e.g., “utility”) does not define legal status.

Practical examples

• Sending money to a friend: Use a payment coin or a low-fee L1/L2. If using a token, remember you still need the chain’s coin for gas.
• Buying an in-game item: Could be an NFT on a gaming-friendly chain; fees and speed matter.
• Paying for a DeFi service: Might require a utility or governance token, or simply the chain’s coin for gas.
• Reducing volatility: A reputable stablecoin may help—but research reserves, audits, and history of holding the peg.

Beginner checklist before you click “send”

1. Am I on the right chain? ETH addresses ≠ SOL addresses, etc.
2. Do I have gas? Keep a little native coin for fees.
3. Is this the correct token contract? Copy addresses from official sources to avoid impostors.
4. Is the asset transferable? Some tokens are locked/vested; some NFTs have transfer restrictions.
5. What are the risks? Smart-contract bugs, admin keys, bridge risk, de-pegs.

Quick glossary

• Fungible: All units are interchangeable (1 USDC = 1 USDC).
• Non-fungible: Each unit is unique (NFTs).
• Mint: Create new tokens; “burn” is the opposite.
• DAO: A group that votes on changes using tokens.
• Bridge: Tech or service that moves value across chains.
• Gas: Fee paid to the network to process your transaction.

Educational only — not financial advice. Always do your own research.