Cryptocurrency Development: Which type of cryptocurrency tokens should you develop?

Posted by Antier Solutions on June 15th, 2022

In early 2020, the global cryptocurrency market size was valued at .49 billion. However, by 2030 it is projected to touch .94 billion, growing at a CAGR of 12.8%. The statistics clearly indicate that there is a huge scope of growth in the space. However, the key to succeeding in this market is to enter the market with the right kind of cryptocurrency at right time. So, before you head for cryptocurrency development, it is important that you develop a better understanding of how different types of cryptocurrencies function.

Different Types of Cryptocurrencies

#1) Utility Tokens

A cryptocurrency utility token is a special type of token designed to support the financing of the project. The cryptocurrency projects use ICOs or Initial Coin Offering to offer their utility tokens to the investors. By owning these tokens, the token holder gets access to a product or service provided by the issuer of the token. An example of a utility token is Basic Attention Token (BAT), an ERC20 token that allows token holders to access services offered by the BAT project.

A particular category of utility tokens is the payment tokens. The token holders use these to buy or sell goods and services on the platform. Before beginning with cryptocurrency development, it must be noted that all utility tokens may not necessarily be used as payment tokens. Some examples of payment tokens are Monero, Ethereum & more.

Challenges with utility tokens:

  • The value of the utility tokens cannot be increased naturally
  • The utility tokens generally face liquidity issues
  • In case the project doesn’t succeed, the token also loses its value

#2) Security Tokens

The security tokens are quite similar to any other token, the only difference is that the security tokens are linked to traditional security. That means they are used to tokenize items of traditional finance like bonds, stocks, real estate, or more. The token issuer issues these security tokens through STOs or security token offerings. The security tokens can further be categorized into equity tokens or asset-backed tokens.

#3) Exchange Tokens

Exchange tokens are the native tokens of crypto exchanges and are used on the exchanges to buy, sell or swap other tokens or to pay gas fees. The exchanges often provide their users with cheaper gas fees, more liquidity, trading discounts, and governing rights when they hold or use the exchange tokens. BNB or Binance Coin is one of the most popular exchange tokens.

#4) Non-fungible Tokens

An NFT or non-fungible token is a digital token that certifies the ownership of a unique and scarce item. They are the latest trend in cryptocurrency development. While NFTs are also powered by blockchain technology, they are primarily used to represent photos, audio files, videos, collectibles, or more such items. Some examples of NFTs are Bored Ape (BAYC), CryptoKitties & more.

#5) DeFi Tokens

Decentralized Applications or dApps are financial applications built on blockchain to facilitate processes like lending and borrowing. Each dApp is powered by a token economy that is driven by a native token of that dApp. This native token is a form of programmable money and is controlled by smart contract codes during cryptocurrency development.

There are a couple of blockchains that support the development of DeFi tokens like Ethereum, Polygon, Cardano, Solana, IOTA, Tron, and more. Using the DeFi tokens, the dApp users can lend, borrow, earn interest, buy insurance, trade on the DeFi exchanges, and do a lot more financial activity.

#6) Stablecoins

As the name suggests, these are crypto coins that offer price stability. These are backed by either fiat or gold or any other precious metal and their price is pegged to the same. For example, USDT is a stablecoin that is backed by USD and therefore its price remains close to . These bring users the exact value proposition of the cryptocurrencies but the prices are not volatile.

#7) Asset-backed Tokens

Asset-backed tokens are a type of crypto tokens that are backed by real-world assets like stocks, gold, fiat, or precious metals. These tokens are issued using ETOs or Equity Tokens Offering.

#8) Privacy tokens

These privacy tokens are developed to provide more privacy to users as compared to coins like Bitcoin. Some users seek more private transactions on the blockchain and there are multiple ways to enable transaction privacy. Some of the very popular privacy cryptocurrencies are Monero, Zcash, Dash, and Verge. These can be developed to be private by default or the users can choose to turn on and off the privacy features.

Wrapping it up

Token or coin development in the blockchain space holds a lot of potential for growth. But things like – the use case behind it, the technology to be used, the blockchain to be utilized and the kind of token to be developed – are crucial for the success of any token or coin.

If you are looking for guidance or support for ideation or cryptocurrency development, Antier Solutions is the perfect solution provider. We provide customized services, aligned to your use case, to help you launch your crypto coin or token.

Schedule a free demo of one of our cryptocurrency development projects or connect with our subject matter experts to share your business needs.

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Antier Solutions
Joined: February 4th, 2021
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