What Are the Different Types of Cryptocurrency?

From Bitcoin to NFTs - there are a lot of different coins and tokens out there. Our guide covers the different types of cryptocurrency you need to know about.

8 types of crypto

There are lots of different ways to categorize crypto. At the simplest level, you could categorize types of crypto into coins and tokens, or even Bitcoin and altcoins. But broadly speaking, and for the sake of this guide, there are eight different types of crypto we’ll cover:

1. Bitcoin (and forks)

Bitcoin is the original cryptocurrency, often referred to as the "OG" of the crypto world. Launched in 2009 by Satoshi Nakamoto, Bitcoin was designed to operate without the need for banks or governments, using blockchain technology to keep transactions secure and transparent. Many consider it “digital gold,” a valuable asset that offers a hedge against traditional financial systems.

But Bitcoin’s development hasn’t been straightforward. Disagreements within the Bitcoin community led to the creation of Bitcoin “forks.” These forks are essentially new versions of Bitcoin with some differences. There are two main types of forks:

Soft forks: Minor changes that most people agree on.
Hard forks: These create a completely new version of Bitcoin, leading to the birth of new cryptocurrencies like Bitcoin Cash (BCH) and Bitcoin SV (BSV). Bitcoin Cash wanted faster and cheaper transactions, while Bitcoin SV aimed to stay closer to Bitcoin’s original design.

2. Altcoins

Any coin that’s not Bitcoin is generally referred to as an “altcoin.” Some of the most well-known altcoins include:

Ethereum (ETH): Launched in 2015 by Vitalik Buterin, Ethereum is more than just a currency. It’s a platform where developers can build decentralized applications (DApps) and smart contracts, which are self-executing contracts that automatically fulfill their terms.
Litecoin (LTC): Often called the “little brother” of Bitcoin, Litecoin was created in 2011 by Charlie Lee. It’s faster and cheaper than Bitcoin, making it a popular choice for everyday transactions.
Ripple (XRP): Created in 2012, Ripple is focused on international money transfers. Its network connects banks and financial institutions, enabling instant, low-cost cross-border payments.
Cardano (ADA): Launched in 2017, Cardano is all about creating a secure and efficient platform for developers. It stands out for its emphasis on research and testing before releasing new features.

3. Stablecoins

Stablecoins are cryptocurrency tokens designed to maintain a stable value, often pegged to fiat currencies like the US dollar, stablecoins offer stability in an otherwise volatile market. They’re ideal for trading, cross-border payments, and storing value without worrying about wild price swings.

Popular stablecoins include:

Tether (USDT): Backed by traditional currency reserves.
USD Coin (USDC): Known for its regulation and transparency.
DAI: A decentralized stablecoin collateralized by assets in the DeFi ecosystem.

Despite being effectively used the same as fiat currency, your stablecoins are treated the same as other cryptocurrencies from a tax perspective.

4. Tokens

Tokens are digital assets created on top of existing blockchains. Unlike coins, which operate on their own blockchains, tokens have a wide range of uses:

Utility tokens: These give you access to specific services within a given ecosystem. For example, Basic Attention Token (BAT) is used to reward users for watching ads within the Brave browser.
Security tokens: These represent ownership in real-world assets, like shares in a company. Unlike real-world assets, they’re largely unregulated and higher risk.
Governance tokens: These let you vote on how a blockchain project is run. For instance, holding Uniswap (UNI) tokens allows you to vote on changes to the Uniswap protocol.

Read next: Crypto Tokens Tax

5. Memecoins

Memecoins are born from internet memes and viral trends. These coins started as a joke but quickly gained and retained popularity. The most famous examples are:

Dogecoin (DOGE): Created in 2013 as a joke based on the “Doge” meme, it unexpectedly became popular, especially with the backing of celebrities like Elon Musk.
Shiba Inu (SHIB): Launched in 2020, Shiba Inu was inspired by Dogecoin and quickly became famous as the “Dogecoin killer.”
Pepe Coin (PEPE): Launched in 2023, Pepe Coin is a meme-inspired cryptocurrency based on the popular internet character Pepe the Frog. It quickly gained attention within the crypto community for its humor-driven approach

6. Privacy coins

Privacy coins are designed to keep your financial transactions private, protecting your digital identity in an age of increasing surveillance. While many think of crypto as anonymous, in reality, crypto is more akin to pseudonymous, as blockchains are public ledgers, with wallet addresses and transactions visible. Some popular privacy coins include:

Monero (XMR): Known for its stealthy features that make transactions untraceable, Monero is a favorite among those who prioritize privacy.
Zcash (ZEC): Offers the option of private or transparent transactions, allowing users to choose how much privacy they want.

7. DeFi tokens

DeFi tokens are born out of different DeFi protocols and serve a variety of purposes within different ecosystems. Key DeFi tokens include:

Aave (AAVE): A digital lending platform where you can lend or borrow crypto without needing a bank.
Compound (COMP): Similar to Aave, Compound allows you to earn interest on your crypto or borrow against it.

8. NFTs

NFTs (Non-Fungible Tokens) are like digital collectibles, representing unique items like art, music, or virtual land. Each NFT is one-of-a-kind and can’t be exchanged on a one-to-one basis like regular cryptocurrencies. Popular NFT projects include:

CryptoPunks: The original NFT collection, featuring unique pixel art characters that have become highly valuable.
Bored Ape Yacht Club: A collection of unique cartoon apes that come with membership perks in an exclusive online community.

How many cryptocurrencies are there?

It’s estimated there are around 20,000 cryptocurrencies - although a large proportion of these are inactive or dead. CoinMarketCap currently lists 10,000 ‘active’ cryptocurrencies - although even with many of these, liquidity may be so low that they’re effectively untradeable.

Why are there so many cryptocurrencies?

The reason there are so many types of cryptocurrencies is that blockchain technology is open-source, meaning anyone can use the original code to create something new. Developers have taken this opportunity to build a vast ecosystem of digital currencies, each designed to solve different problems or offer new features. Some cryptocurrencies, like Bitcoin, have become widely accepted and valuable, while others are more niche or experimental.

Coins vs. tokens

Coins and tokens are both types of cryptocurrencies, but they serve different functions.

Coins, like Bitcoin and Ethereum, operate on their independent blockchains and are typically used as a medium of exchange, much like traditional money. They can store value and be used for transactions between parties.

Tokens, on the other hand, are created on existing blockchains, such as Ethereum, and have a broader range of uses. Tokens can represent anything from digital assets and access to services to ownership rights and governance roles.

Don’t forget the tax implications...

Yep, your crypto is taxable. If you’re not already up to date with the latest crypto tax guidance, you can check out our crypto tax guides for information about crypto tax laws where you live or you can sign up to Koinly free today to calculate your crypto taxes.