‘With great chances of returns comes great chances of losses’

Crypto Ben Parker ​​😉

Market capital of crypto has grown to more than a Trillion Dollars but the crypto industry is still considered to be in its early stages. Some people draw a parallel to the current time in the crypto/defi industry to that of the mid-2000s of the Internet when companies like Google, Facebook, and Youtube were starting to emerge.

Going through what all 40,000+ crypto tokens are aiming to achieve would be too much hence this article aims at categorizing some of the key value propositions that top market cap crypto tokens are aiming to bring. Based on that we have clubbed the crypto projects into certain categories.

1. Blockchain Gold (Store of Value)
   Gold, Silver, and a few other commodities serve important purposes in our financial world. Other than being a shiny, inert element they serve as a store of value since there is a constant demand and limited supply of these. Masses divide a certain portion of their portfolio into this asset class as over a long period of time gold is expected to catch up ahead of inflation.
   Tokens like BTC, LTC, BCH, and BSV aim for this same functionality. The projects of these tokens are aiming to serve the store of value on blockchain and hence are sometimes referred to as blockchain gold.
    
2. Blockchain Oil (Layer1s Smart Contract)
   Just like Android and iOS serve as an underlying layer on top of which mobile applications can be built, similarly projects like Ethereum, Cardano, Solana, and Polkadot are trying to build projects on which the capability of DAAPs to be built on. They are working on building projects that are more programable through constructs called smart contracts. Another analogy in which this can be described is that these are the blockchain oil on which utility-providing DAAPs can be built.
    
3. Layer 2s
   Projects like Polygon, Arbitrum, and Optimism aim to overcome the shortcomings of Layer 1 solutions by building a Layer 2 solution on top of the existing Layer 1 solutions. Their aim is more scalability of the layer1 solution for a greater DAAP ecosystem.
    
4. Payments
   While tokens like BTC and ETH do handle the tokenomics of their project they can’t scale to do a large number of transactions per second and replace the current fiat currency system. Certain cryptocurrencies are aiming to solve this problem specifically and compete with the likes of VISA to replace the current payment system. While this seems to be the largest use case, this category of cryptocurrency also gets the hardest time for mainstream adoption from regulatory bodies. The best example would be that of XRP which it faces constant scrutiny and lawsuit from SEC in America.
    
5. Stablecoins
   The value of any entity is always expressed with respect to some other things. To solve this quantification problem in the real world we have all object’s values expressed in fiat currency and then the value of all fiat is expressed to the dollar which is the largest fiat currency by market cap.
   Crypto assets are extremely volatile and to understand this volatility better with respect to real-world assets we need a representation of some stable real-world assets on the blockchain. Enter stablecoin which is a token on blockchain whose value always mimics some real-world asset. While a stablecoin can be pegged to any particular real-world asset, the most popular ones are that are pegged to US Dollar.
   The most popular stablecoin you would hear about would be USDT and USDC.
    
6. Meme Coins
   Since it's easy to fork a project and create a new token on blockchain and since the price of any token at the end is based on demand and supply, hence we have meme coins. Most of the meme coin projects aren’t working on adding any value to the world and their demand is built purely on hype and promises of future gains based on marketing gimmicks. The most popular among them are the Doge coin & Shiba Inu.

The above-mentioned are some of the cryptos token categories but there are a lot many that we didn’t talk about like, Oracles Token, Exchange token, Privacy Token etc. The purpose of this article is to give users a slight glimpse into the crypto world so that they can have a better understanding of how to migrate through this new asset class if they want to take exposure to this.