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5 Types of Cryptocurrency Projects

A visualization of five types of cryptocurrency projects as a planetary system.

Cryptocurrency projects are based on different combinations of encryption, decentralization and storage technologies. There are already many projects (more than 10,000) that can solve problems in different fields. Among this projects variety, there is a whole range of technological solutions:

1. Payment solutions 

Cryptocurrency is digital money on the blockchain. Some projects try to compete with the traditional fiat money, while others are designed for specific types of payments:

  • Currencies: Function like blockchain-based money, global and decentralized;

  • Payment platforms: Focus on payments for a specific use case or industry; 

  • Rewards: Offer cryptocurrency-based rewards to users for various actions;

  • Stablecoins: Their value is pegged to a specific asset (e.g., the U.S. dollar or GBP) through collateral or other mechanisms.

2. Infrastructure solutions

They serve as platforms for the creation and implementation of various cryptocurrency use cases.  In such projects, cryptocurrencies are used to pay for the work of computers. These computers are responsible for the decentralized execution of programs in the blockchain. Such programs are called DApps, or decentralized applications. The closest traditional examples of this process are Amazon Web Service or iOS.

Blockchain platforms provide different cryptocurrency use cases, requiring different cryptocurrencies (e.g., EthereumSolana, and Cardano). Thanks to this feature, the second core aspect of crypto is realized—it is a "decentralized computer."

3. Financial solutions

These blockchain-based solutions help execute financial services with cryptocurrency and decentralize project management. For example, the UNI token allows users to trade on the Uniswap exchange and participate in votes on its development. Overall, financial solutions can be divided into:

  • Asset management: Provide tools for on-chain management of cryptoassets;

  • Centralized exchanges: Cryptoassets on these platforms are typically used for trading discounts or access to special features;

  • Decentralized exchanges: Allow users to trade and transfer cryptoassets directly between parties, without any third-party involvement or control;

  • Crowdfunding: A bridge between projects looking to raise funds with those looking to invest or donate;

  • Lending: Allows users to borrow or lend cryptoassets;

  • Prediction markets: Provide markets for speculating on the outcome of events.

4. Service solutions

These projects use cryptocurrency for managing data on a blockchain.What they have in common is that they help blockchain-based financial products access and validate external data sources. 

Service crypto solutions provide users with digital identities and link individuals' real-world records to the blockchain. Use cases can range from healthcare services (e.g., Dentacoin) to cryptocurrencies that offer file storage services (Storj, Siacoin) to specific artificial intelligence and energy features. 

5. Entertainment and content

Cryptocurrencies are used to reward users for creating and interacting with content, games, and media, as well as participating in gambling and virtual/augmented reality. 

As a result, cryptocurrency projects are not just a series of numbers on screen; they are a whole range of new technological solutions to improve processes using blockchain. These  solutions are of great interest to businesses and investors, as the technology is at the primary stage of its development and can solve many of today's economic problems.

Published: Nov 30, 2021
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