Types of Crypto Assets

types of crypto assets

As we enter the all-digital era, the presence of cryptocurrencies is starting to get a lot of attention. This is because crypto assets are only valuable as a form of investment, but can also be used as a transaction tool in the digital world. No wonder many people are starting to learn how to take advantage of the digital currency. 

If you are starting to dive into the world of crypto investment, then you must have often heard the term ‘crypto assets’. Most people will immediately relate crypto assets to cryptocurrencies like Bitcoin, Ethereum, Litecoin, and so on. Cryptocurrency is just one of the types of crypto assets that you can own. There are multiple types of crypto assets with different functions..

There are thousands of crypto assets, so it will be very difficult to memorize them all. These assets can be categorized into several types. Some are used as currency tokens, others are used as utility tokens, security tokens, commodity-backed crypto, and stable coins.

Currency Token

One of the most well-known types of crypto assets is currency tokens / cryptocurrencies, also known as digital currencies. One of the well-known crypto assets which serves as a cryptocurrency is Bitcoin. This type of crypto asset is the most widely known by people and is made with a function similar to fiat currency as a means of payment. The only  difference is, this asset is used as a currency meant for digital transactions. However, currently cryptocurrencies have not been accepted as payment in Indonesia even though they have often been used by large global companies such as Microsoft and Paypal.

Utility Token

Utility tokens, also known as tokens, is a type of crypto asset that is used for payment transactions for certain goods and services. It is different from currency tokens. Even though they are both used as a means of payment, utility tokens can only be used in one particular platform and can only be accessed there. Meanwhile, cryptocurrencies can be used for any type of transaction,regardless of the platform. 

In addition, another difference between currency and utility token is in the quantity of tokens available. Cryptocurrencies like Bitcoin are created in limited quantities, which increases their value  when the supply drops. However, for utility tokens, the inventory is not closed so there is always the potential to increase their quantity. This makes their value vulnerable to inflation which causes asset devaluation. From this perspective, utility assets are often considered to carry greater investment risk. Some examples of utility tokens include HARA Token, HNST, PXG, and LYFE.

Security Token

This token works similarly to utility tokens, but is only used in cryptocurrency projects such as the crowdfunding process. Securities tokens represent genuine digital bonds, equities and other securities for Peer to Peer traders without financial intermediaries. In addition, this token also represents a stake in the project and is accompanied by the possibility of a profit in the future. Owners of these crypto assets will have benefits i.e. voting rights, profit and dividend sharing, etc. Some of the popular types of securities tokens are Bcap (Blockchain Capital), Science Blockchain, and USDT.

This type of crypto asset has many advantages, such as increasing asset liquidity because it can be traded directly on the exchange without lag time. Furthermore, the holdings of the security tokens can also be spread across multiple denominations which can make these assets more affordable when purchased in smaller denominations.

Stable Coin

Stablecoins is pegged to the value of fiat (traditional) currencies. These types of crypto assets are priced to be pegged to cryptocurrencies, banknotes, or exchange-traded commodities (such as precious metals or industrial metals). This is why stable coin prices are much more stable, as their value fluctuates very little. Some examples of stablecoins are: USDT – pegged to USD – where 1 USDT equals 1 USD, and IDK – pegged to IDR – where 1 IDK equals 1000 IDR.

Commodity-Backed Crypto

Commodity-Backed Crypto is similar to Stablecoin but is pegged to the value of certain commodities (such as gold, crude oil, coffee beans) so the price tends to be more stable. Most crypto assets generally have an unpredictable trend of fluctuations in value. Hence, one of the advantages of this crypto asset is its lower volatility.

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