grouping cryptocurrencies by their purpose

Grouping Cryptocurrencies By Their Purpose And How Price (Like Vechain Price) Comes Into The Mix?

Anytime VeChain price or other cryptocurrencies price dips, everybody rushes to buy so they sell for a profit when its price increases. When VeChain price is down and you buy to sell when the pride is higher, it is a quick way to make a couple of bucks.

However, while you are at it buying every dip, you can save yourself the hassle of buying crypto that doesn’t have much potential. How can you achieve this? Well, you can achieve this by understanding that there are different types of cryptocurrencies, and they can be divided by their purpose.

By the way, BitIQ has been able to develop a technique that takes the three most powerful crypto trading techniques and combines them into one cohesive strategy. This way, traders can maximize their profits while minimizing their risk. By using BitIQ, investors can get access to these strategies without having to spend hours learning how to trade themselves. Instead, they can focus on what they do best- running their businesses.

Below we elaborated on the six most useful groups of cryptocurrencies.

Decentralized finance (DeFi)

First on our list is DeFi which is a class of financial products. If you’re a fan of the financial market, you must have heard of DeFi. What makes this group of cryptocurrencies different is that it brings the convenience of peer-to-peer transactions to investors.

This is because the DeFi platform makes it possible to save, borrow, lend, trade, and earn interest without all the usual bureaucracy and minutiae. DeFi harnesses the efficiency and power of smart contracts i.e., digital contracts that are on the Blockchain. Examples of DeFi coins include the links of Cardano, Solana, Polkadot, and so on.

Digital gold

Another useful category of crypto is digital gold. As the name implies, they are cryptocurrencies that are like gold in the sense that they can be stored and will increase in value. The same way people buy gold is not because they intend to use it to purchase from a store, that’s how people buy digital gold because they intend to hold it till the price appreciates.

A primary example of digital gold is Bitcoin. Although the primary use of Bitcoin is as a peer-to-peer cash system, its volatility limits its use. Litecoin is another example of digital gold, and it is described as the silver to Bitcoin as gold.

Digital cash

Normally, you’d expect Bitcoin to fall into this category of cryptocurrencies but it’s not. The reason Bitcoin doesn’t fall into this category is that its price is too volatile like the VeChain price. As such, Bitcoin Cash, an innovation from Bitcoin was introduced which fits perfectly into this category.

Although this does not mean that Bitcoin Cash’s price is not still volatile, its volatility is still acceptable to deem it a currency. The purpose of this category of cryptocurrency is to use its token and coins to make purchases often online. Ripple or XRP is another perfect example of digital cash.

Software platforms

The software platforms are another category of cryptocurrency that provides a programmable crypto environment for developers. The same way smartphones allow users to download and use third-party apps, so are software platform cryptocurrencies.

A perfect example of a software platform cryptocurrency is Ethereum. Ethereum operates as a cryptocurrency network along with its native cryptocurrency Ether. With Ethereum, developers can create dApps which is an Ethereum-based app that uses the Ethereum network. The perfect use of the Ethereum app is to create NFTs tokens.

Stablecoin or digital fiat

Next on our list of stablecoin which represents a government-backed currency on the Blockchain or a fiat. Cryptocurrencies within this category come in handy when you want to quickly move your assets within a cryptocurrency exchange. VeChain is a perfect example of a cryptocurrency that falls into this category.

Despite the frequent fluctuation of VeChain price, its value is pegged to its value from other commodities or currencies. Tether is another example of a stablecoin that pegs its value from the U.S. dollar.

Memecoins

Lastly, we have the memecoins which when you study it feels like a strange coin. Most cryptocurrencies that fall in this category have little to no value. What makes memecoins even more distinguishable is that they have no discernable value proposition. Experts often advise against investing in this category of coin for obvious reasons.

Rather it’s more recommended to invest in cryptocurrencies like VeChain, despite VeChain price frequent price fluctuation. Ethereum and Bitcoin are also good choices rather than memecoins. Dogecoin is a perfect example of a memecoins. Although dogecoin has seen quite an increase in demand lately which makes it quite valuable they are still quite volatile. PutinCoin and Whoppercoin also fall into this category of cryptocurrency.

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