Key points at a glance
Cryptocurrency can be understood as a digital version of currency, and it has more and more uses, such as storing value, playing games, etc.
There are many categories of cryptocurrencies, each with its own uses: there are mainstream currencies like Bitcoin and Ethereum, there are meme coins driven by community popularity, and there are NFTs specifically used for digital collectibles, and so on.
Risk and research are important: Cryptocurrency prices fluctuate greatly, so please be sure to do your homework (DYOR, Do Your Own Research) first, and do not invest more money than you can afford to risk.
Next step: You can explore different categories at your own pace. We will also continue to introduce more interesting things in the world of cryptocurrency in subsequent articles.
If youre still confused about cryptocurrency, you can actually think of it as a digital currency that uses cryptography (advanced mathematical techniques) to secure transactions. Since Bitcoin debuted in 2009, the entire cryptocurrency field has skyrocketed, with new concepts from NFTs (digital collectibles) to DeFi (decentralized finance) emerging one after another. This guide will first help you understand some of the most common categories of cryptocurrency, tell you why these categories are important, and give you some simple and easy-to-use guidelines so that you dont get lost in this new world.
Table of contents
Why do we need to understand the categories of cryptocurrencies first?
What exactly is cryptocurrency?
Main categories of cryptocurrencies
Mainstream Coins
Stablecoins
Altcoins
Centralized Exchange Token (CEX Token)
NFT/Metaverse Token
Game Tokens (GameFi)
AI Token (Artificial Intelligence)
Lending Tokens
Liquid Staking Derivatives (LSD)
Zero-Knowledge (ZK) Tokens
RWA Tokens (Real World Assets)
DePIN Token (Decentralized Infrastructure)
Meme Coins
How to buy your first cryptocurrency?
Simple 5-step guide
How XT.COM can help you in your crypto journey
Final Reminder
Why do we need to understand the categories of cryptocurrencies first?
To be honest, there are so many projects in the cryptocurrency world right now. New coins and new projects pop up every day. If you can classify them first (for example, stablecoins, NFT /metaverse tokens, or meme coins), you can greatly improve your understanding of them and avoid blindly following the trend. Here are a few benefits:
More clarity:
Each token has its own purpose and function. It is easier to get confused if you understand them before buying.
Risk Management:
Cryptocurrencies are highly volatile, and if you want to diversify your risk, you need to understand the characteristics of different categories.
Strategic Thinking:
Want to trade short-term or hold long-term? First, see which category it belongs to so that you can make a better decision.
mage Credit: MasterTheCrypto
What exactly is cryptocurrency?
One sentence description
Cryptocurrency is a digital currency based on blockchain, which is like a public ledger that does not require a bank or other centralized institution to keep records.
Whats so cool about it?
Fast and low-cost transfers:
International transfers can be completed in just a few minutes, and are often cheaper than traditional banks.
You are in control:
You no longer need a bank as an intermediary, you are the master of your own funds.
Innovations are endless:
From game rewards to decentralized financial applications, people are constantly inventing new ways to play.
Image Credit: LinkedIn (Raajashri Sathyamurti)
Main categories of cryptocurrencies
Now, let’s take a look at the most common types of cryptocurrencies and what each is useful for. Once you understand them, you can make a more informed choice when you’re looking for something to buy.
Mainstream Coins: The Core of Cryptocurrency
Example
Bitcoin (BTC) : Known as digital gold, it is the most well-known cryptocurrency.
Ethereum (ETH) : Supports decentralized applications (dApps) and smart contracts and is the basis for many projects.
Why is it important?
These coins usually have the highest liquidity and the highest global popularity, making them suitable for beginners.
Relatively speaking, although they also have volatility, they have been widely accepted by the market and are relatively easy to get started with.
Tips
If you are new to cryptocurrencies, you can start by buying Bitcoin or Ethereum .
You can compare their past prices and development trajectories to see which one you prefer, or allocate some of both.
Stablecoins: Finding stability amid turbulence
Example
Tether (USDT) : A stablecoin pegged to the US dollar.
USD Coin (USDC) : High transparency, backed by an audit report, and also pegged to the US dollar.
DAI : A decentralized stablecoin that relies on smart contracts to maintain its peg to the U.S. dollar.
Main Application
Used to reduce the price volatility of cryptocurrencies. You can park your funds in stablecoins when the market is unstable.
Some people also use it for quick transfers or short-term savings, and some platforms can also provide interest on your stablecoins.
Did you know?
Some DeFi platforms allow you to deposit stablecoins to earn returns , and the risk is relatively smaller than that of highly volatile coins (but you should still carefully evaluate the security of the platform).
Altcoins: Driving Innovation
Example
Solana (SOL) : Known for its high transaction speed, it is commonly used in DeFi and various dApps.
Cardano (ADA) : Focuses on security and scalability.
Avalanche (AVAX) : A scalable blockchain for dApps and NFTs.
Toncoin (TON) : After its restart, it focuses on financial application scenarios and has a lot of community support behind it.
Sui (SUI) : An innovative blockchain that emphasizes ease of use and efficiency.
Algorand (ALGO) : Pursuing security and scalability, providing the foundation for decentralized applications.
Why are these coins valuable?
They often represent new directions in blockchain technology, such as faster speed, cross-chain collaboration, governance functions, and so on.
Actionable Steps
You can first choose one that interests you from the top 10 altcoins by market capitalization, read its white paper or in-depth analysis, and see if the team and technical route can impress you.
Centralized Exchange Token (CEX Token): The “Original Token” of the Exchange
Example
Binance Coin (BNB) : Use it to enjoy fee discounts on the Binance platform.
XT Token (XT) : The ecological and incentive token on the XT.COM platform.
Bitget Token (BGB) : The platform coin of Bitget Exchange.
OKX Token (OKB) : Used for transactions, governance and fee reduction within the OKX ecosystem.
GateToken (GT) : Gate.io’s platform currency, enabling transactions and other ecological rights.
Where is the value point?
Holding these tokens usually allows you to enjoy lower transaction fees, participate in platform governance, and potentially receive benefits such as staking dividends.
Do you know?
If you frequently trade on a centralized exchange, using its tokens properly can save you money on transaction fees.
NFT /Metaverse Token: Digital Ownership and Virtual Worlds
Example
Decentraland (MANA) : Can be used to purchase virtual land and experience content.
The Sandbox (SAND) : Allows players to create and monetize virtual spaces.
Axie Infinity (AXS) : Earn income by playing games and trading characters (Axies).
Why is it so popular?
Make virtual items yours, such as you can actually own a piece of digital land or a unique game character.
Tips
If you have never played with a Metaverse project, you might as well open a free account on these platforms, take a look around, get to know the community atmosphere and gameplay, and then decide whether to invest.
GameFi Token: A combination of entertainment and income
Example
Gala (GALA) : Focuses on blockchain games, allowing players to own and trade in-game assets.
Enjin (ENJ) : Provides support for in-game NFTs.
Immutable (IMX) : Solve the high mining fees of NFTs and allow players to mint and trade with zero gas fees.
What are the benefits?
It is truly a Play-to-Earn game, and gives you full control over your in-game digital items.
Practical steps
If you are interested in blockchain games, find a game with low barriers to entry, free or very low cost to try it out first and see if you like this new way of playing.
AI Token: Where blockchain meets artificial intelligence
Example
SingularityNET (AGIX) : Decentralized AI service marketplace.
Fetch.ai (FET) : Automate real-world tasks with AI agents.
Bittensor (TAO) : Aims to decentralize collaborative rewards for machine learning.
Whats new
Make AI more decentralized and open, so that more people can participate in the development and use of AI.
You may not know
In the future, AI tokens may play an important role in predictive models, AI tools, and decentralized markets.
Lending Tokens: A New Way to Play in Cryptocurrency Finance
Example
Aave (AAVE) : You can deposit your coins to earn interest, or you can use them as collateral to borrow funds.
MakerDAO (MKR / DAI) : After pledging crypto assets, DAI (stable currency) is generated.
Compound (COMP) : A decentralized platform for lending and borrowing crypto assets.
How does it work?
Lending: Deposit your coins on the platform and earn interest.
Borrowing: Use your coins as collateral to borrow funds without selling them.
Kind tips
When doing mortgage lending, you should always pay attention to the mortgage rate. If the market falls sharply, your position may be “liquidated” - that is, the lending platform sells your collateral.
Liquid Staking Derivatives (LSD): Staking can also have liquidity
Example
Lido (LDO) : Get stETH after staking ETH , which can still be used in DeFi.
Rocket Pool (RPL) : A more decentralized way to stake Ethereum.
Why is it cool?
Originally, after staking, the coins are locked and cannot be moved. But with derivative tokens, you can get the staking income while continuing to invest in other projects.
What can be done?
First take a look at the annualized rate of return and risks provided by different platforms, and then decide how much ETH to stake . It’s also a good idea to do a “small experiment”.
Zero-knowledge (ZK) tokens: a tool for privacy and scalability
Example
zkSync (ZK) : Using ZK-rollup to reduce fees and speed up Ethereum .
Loopring (LRC) : Enables fast and private decentralized transactions.
Why is it important?
ZK technology can protect user privacy and make blockchain networks run faster and more efficiently.
General knowledge expansion
Zero-knowledge proof is one of the popular solutions for Ethereum expansion, allowing the network to process more transactions while ensuring security.
RWA Token: Making “Real World Assets” Digital
Example
PAX Gold (PAXG) : The tokens you hold are backed by real gold.
RWA.Inc ( RWA/USDT ): Provides tokenization services for various types of assets, allowing more people to participate easily.
Fun Places
You don’t have to rent a safe or worry about logistics, you can buy “gold” or other physical asset shares directly on the blockchain.
Simple suggestions
You can first look at how traditional assets such as gold and real estate are tokenized. Compare its coin price with the value of physical gold and see the difference between the two.
DePIN Token: The “Cornerstone” of Decentralized Infrastructure
Example
Helium (HNT) : Get token rewards by building IoT wireless network nodes.
Akash Network (AKT) : Decentralized cloud computing platform.
Render (RNDR) : Distributed GPU rendering service that allows digital creators to obtain rendering resources in a decentralized manner.
Why is it worth paying attention to?
These projects use token rewards to encourage more people to build hardware or software infrastructure such as networks, computing power, etc. to form a decentralized resource network.
Practical advice
If you are interested in running a node, you can take a look at Helium. You can buy a device to use as a hotspot at home and earn some tokens by the way, but you need to evaluate the hardware cost and market conditions.
Meme Coins: A product of community popularity
Example
Dogecoin (DOGE) : The earliest meme coin that was once very popular.
Shiba Inu (SHIB) : Has a very active community and ecological expansion.
Pepe (PEPE) : Inspired by the classic frog emoticon.
Is there anything I need to pay special attention to?
The prices of these coins are heavily dependent on social media and community enthusiasm and fluctuate wildly.
If you want to give it a try, remember to only invest money you can afford to lose, and dont lose everything because of FOMO (fear of missing out).
How to buy your first cryptocurrency?
1. Choose an exchange
First, check its security, user-friendly operation, and reputation. (For example, XT.COM)
2. Register an account and pass identity verification
Most regular exchanges will require you to do KYC (real-name authentication), which is a normal process.
3. Top up funds
You can top up with other cryptocurrencies, or with fiat currency (such as USD) via bank transfer, credit card, etc.
4. Select a currency
For beginners, consider buying Bitcoin (BTC/USDT) or Ethereum (ETH/USDT) first. You can also use stablecoins such as USDT to switch trading pairs.
5. Confirm the fee and click Buy
Every exchange will charge transaction fees or network fees, so please understand them clearly before buying.
How XT.COM can help you in your crypto journey
If you want to explore the world of crypto more deeply, XT.COM can provide a range of tools and services to help you learn and trade more easily:
Rich currency selection: covering almost all the categories mentioned above, giving you more room for exploration.
Professional but uncomplicated trading tools: Whether you are a novice or an experienced trader, you can find the functions that suit you.
Educational Resources: Provides a variety of tutorials, articles, and guides to help you learn about the world of crypto from scratch.
Community Support: We have an active Telegram group , Discord channel , and a responsive customer service team to answer your questions.
(Tip: If you are a beginner, you may want to take a look at the platform’s “Tutorial” to familiarize yourself with the interface and security features.)
Final reminder and encouragement
This “Beginner’s Map” is just the beginning of your cryptocurrency journey. There are many interesting corners of the crypto world waiting for you to explore. However, while having fun, you must also be cautious:
FOMO Price Volatility:
Dont be led by market sentiment, and only invest money you can afford to lose. You can consider fixed investment to smooth your entry.
Security Awareness:
Set a strong password and enable 2FA (two-factor authentication).
Beware of phishing websites and confirm that the URL is correct before logging in.
Never give your recovery phrase to anyone, and it is best to keep it offline.
Hardware wallet storage:
If you plan to hold your coins for a long time, you can consider buying a hardware wallet (such as Ledger, Trezor) to keep your assets offline.
Stay curious:
Blockchain technology is constantly evolving. Pay more attention to authoritative and reliable information channels and continue learning.
Whether you just want to understand the basic concepts or plan to delve into various advanced projects, now you have a map of the crypto world.
Have fun, and welcome to this new world of possibilities!
About XT.COM
Founded in 2018, XT.COM currently has more than 7.8 million registered users, more than 1 million monthly active users, and more than 40 million user traffic within the ecosystem. We are a comprehensive trading platform that supports 800+ high-quality currencies and 1,000+ trading pairs. XT.COM cryptocurrency trading platform supports a variety of trading products such as spot trading , leveraged trading , and contract trading . XT.COM also has a safe and reliable NFT trading platform . We are committed to providing users with the safest, most efficient, and most professional digital asset investment services.
