The main types of cryptocurrency are store-of-value coins such as Bitcoin, smart-contract platform coins such as Ether, stablecoins pegged to a currency, wrapped tokens that mirror another asset, utility and governance tokens, privacy coins, meme coins, and tokenized real-world assets such as gold or shares. Each carries different risks and sources of value.
What is the difference between a coin and a token?
A coin is native to its own blockchain: BTC on Bitcoin, ETH on Ethereum, BNB on BNB Chain. It pays that network's transaction fees and, on proof-of-stake chains, is staked to secure it. A token is issued by a smart contract on an existing chain. USDT, Chainlink's LINK and BTCB are tokens; they rely on the host chain for security and pay its fees in the host chain's coin. "Altcoin" simply means any cryptocurrency other than Bitcoin.
What are the main types of cryptocurrency?
| Type | What it does | Examples | Main risk |
|---|---|---|---|
| Store-of-value coin | Scarce digital money with no issuer | Bitcoin (BTC) | Large price swings; no cash flows |
| Smart-contract platform | Runs applications; the coin pays fees and secures the network | Ethereum (ETH), BNB, Cardano (ADA), NEAR, Solana (SOL) | Competition between chains; software bugs |
| Stablecoin | Aims to hold a steady value, usually $1 | Tether (USDT), USD Coin (USDC) | Issuer, reserve and de-pegging risk |
| Wrapped or bridged token | Represents an asset from another blockchain | BTCB, WBTC, WBNB | Custodian or bridge failure |
| Utility, oracle and governance token | Pays for a service or votes on protocol changes | Chainlink (LINK), Uniswap (UNI), Aave (AAVE) | Value depends on the protocol being used |
| Privacy coin | Can hide amounts and addresses | Zcash (ZEC), Monero (XMR) | Exchange delistings and regulatory pressure |
| Meme coin | Driven by community and social media attention | Dogecoin (DOGE) | Hype-driven swings; pump-and-dump schemes |
| Tokenized real-world asset | Tracks gold, shares, ETFs or bonds | Tether Gold (XAUT), Ondo tokenized stocks | Issuer and custody risk; limited legal rights; eligibility limits |
What are store-of-value coins and smart-contract platforms?
Bitcoin is the main store-of-value coin. Its code caps supply at 21 million BTC and it has no company or foundation that can issue more. Supporters call it digital gold; critics point out that its price has repeatedly fallen by more than half, which is not how most people expect a store of value to behave. Both views explain why bitcoin is volatile.
Smart-contract platforms such as Ethereum, BNB Chain, Cardano, NEAR and Solana are general-purpose blockchains that run programs. Their coins are needed to pay for computation and, on proof-of-stake networks, to secure the chain, so demand for the coin is linked to how much the network is used. Many platforms also have layer-2 networks built on top; our guide to layer 1 vs layer 2 blockchains explains the difference.
How do stablecoins keep their value?
- Fiat-backed stablecoins such as USDT and USDC hold cash and short-term government debt in reserve and let approved customers redeem tokens for dollars. Their reliability depends on the issuer and its reserves; Tether publishes quarterly reserve attestations.
- Crypto-collateralised stablecoins are backed by more crypto than they issue, locked in smart contracts that sell collateral automatically if its value falls.
- Algorithmic stablecoins try to hold their peg through supply rules alone. TerraUSD, the best-known example, collapsed in May 2022.
Regulators now treat payment stablecoins as their own category: the EU's MiCA rules for stablecoin issuers have applied since 30 June 2024, and the US GENIUS Act of July 2025 requires licensed issuers to hold at least one dollar of eligible reserves for every dollar of stablecoins.
What are wrapped tokens such as BTCB and WBNB?
A wrapped token lets an asset be used on a blockchain where it is not native. BTCB (Binance-Peg Bitcoin) is a BEP-20 token on BNB Chain issued by Binance and backed by bitcoin that Binance holds, so its value depends on Binance honouring that backing. WBNB works differently: a smart contract locks native BNB and issues an equal amount of the token, so the main risk is a contract flaw rather than a company. Read what BTCB is and how its peg works for the details.
What are tokenized real-world assets?
Tokenized real-world assets (RWAs) put traditional assets on a blockchain. Tether Gold (XAUT) represents one troy fine ounce of gold on a London Good Delivery bar; see how tokenized gold works. Ondo Global Markets, now branded Ondo Stocks, issues tokens such as NVDAon and SPYon that give economic exposure to US-listed shares and ETFs, with dividends reinvested, but no shareholder voting rights, and they are not offered to US persons. Our explainer on Ondo tokenized stocks covers eligibility and risks.
Why are privacy coins and meme coins higher risk?
Privacy coins such as Zcash and Monero can hide transaction details. That feature draws regulatory scrutiny, and some exchanges have delisted privacy coins in certain countries, which can reduce liquidity overnight. Meme coins such as Dogecoin have little function beyond community interest, so prices follow attention. The US SEC has warned that promoters sometimes create a meme coin, hype it on social media and sell before the hype fades.
How Wealtii's funds map to these types: the Digital Asset Core Index Fund holds only crypto: BTCB, WBNB, NEAR, ETH, LINK, ADA and ZEC, so it carries wrapped-token and privacy-coin risks as well as market risk. The Tech & Digital Asset Growth Fund and the Multi-Asset Balanced Allocation Fund mainly hold tokenized stocks and ETFs, tokenized gold (XAUT) and, in the Balanced fund, a tokenized silver ETF, alongside a smaller crypto share; funds containing tokenized stocks may not be available in all jurisdictions, including the United States.
Frequently Asked Questions
What is an altcoin?
An altcoin is any cryptocurrency other than Bitcoin. The term covers everything from large smart-contract platforms such as Ethereum to small, thinly traded tokens, so on its own it says nothing about quality or risk.
What is the difference between a coin and a token?
A coin is native to its own blockchain and pays that network's fees, such as BTC on Bitcoin or ETH on Ethereum. A token is created by a smart contract on an existing blockchain, such as USDT or Chainlink's LINK, and depends on that chain's security.
Can a stablecoin lose its peg?
Yes. A stablecoin is only as reliable as its reserves, its issuer and its redemption process. The algorithmic stablecoin TerraUSD collapsed in May 2022, and even reserve-backed stablecoins have briefly traded below $1 during periods of market or banking stress.
Which type of cryptocurrency is best for beginners?
No single type suits everyone. Large, long-established coins are usually easier to buy and research than small tokens, but every type of crypto can fall sharply in price. Many beginners keep crypto to a small share of their savings and spread it across several assets rather than one coin.
📚 Sources & References
- Bitcoin.org — Frequently Asked Questions (fixed 21 million supply) (accessed 21 Oct 2026)
- ethereum.org — Stablecoins (fiat-backed, crypto-backed, precious-metal and algorithmic designs) (accessed 21 Oct 2026)
- Tether — Transparency: USDT reserves and attestation reports (accessed 21 Oct 2026)
- Tether Gold (XAUT) — issuer site (accessed 21 Oct 2026)
- Ondo Finance — Ondo Stocks (formerly Ondo Global Markets): eligibility and economic exposure (accessed 21 Oct 2026)
Disclaimer: This content is for educational purposes only and does not constitute financial, tax, or legal advice. Digital assets are volatile and you can lose some or all of the money you invest. Past performance does not guarantee future results. Wealtii is not registered or licensed with any financial regulator; see our Regulatory Status page.
