Cryptocurrency sectors you should know before investing

Cryptocurrency sectors you should know before investing

The cryptocurrency market has been the subject of discussion lately and in our quest to educate crypto enthusiasts on the use and opportunities the crypto market presents, we have chosen to do this article explaining some of the sectors or categories that exist in the crypto space.

According to coinmarketcap, there are over 10,000 cryptocurrencies and that brings up the question: Why so many since their main purpose is to facilitate payments?

The answer is simple. These cryptocurrencies perform different functions, relative to their sector or category.

READ: China’s financial regulators ban cryptocurrency business

As with the stock market, the cryptocurrency market has many sectors. These sectors are usually referred to as categories. It is important to know these categories because their prices tend to move in the same manner. According to coinmarketcap, 116 categories are in existence in the cryptocurrency market.

The knowledge of the categories will help foster understanding of how innovations, laws and public interest will affect similar cryptocurrencies.

READ: Ethereum gas fee over $2,000 during market meltdown

Keep in mind that this categorization is not final and they may be ranked differently, depending on the understanding of the cryptocurrency and/or how the developers have explained it. It is also possible for a particular cryptocurrency to belong to more than one category as some cryptocurrencies perform dual operations.

In this article, we will be looking at the major categories in the cryptocurrency space that are important for you to know before making investment decisions.

READ: Tesla unfazed as Coinbase shares fall amid crypto sell-off

Payments

Although all cryptocurrencies are essentially used for day-to-day financial transactions, these cryptocurrencies were solely created to facilitate financial transactions between individuals without the need for any intermediary to permit or facilitate them. The top 3 in this sector are:

Bitcoin (BTC)

Dogecoin (DOGE)

Ripple (XRP)

READ: Beyond crypto jokes: How crypto market crash will affect Nigerians

Stablecoins

Stablecoins are cryptocurrencies that are designed to be pegged to a cryptocurrency, fiat money or exchange-traded commodities (such as precious metals or industrial metals). The top 3 in this sector are:

Tether (USDT)

USD Coin (USDC)

Binance USD (BUSD)

READ: CBN orders banks to accept travel documents, refugee ID for transactions

Smart Contract

This category consists of cryptocurrencies that are computer protocols that intend to digitally facilitate, verify, or enforce the negotiation or performance of a contract without any third parties. Smart contracts can be applied to any industry such as banking, marketing, insurance, etc. The top 3 in this sector are:

Ethereum (ETHER)

Cardano (ADA)

Chainlink (LINK)

READ: The difference between Bitcoin and Altcoins

Centralized Exchange

This category refers to tokens that exist primarily on centralized exchanges for use on those exchanges. Centralized exchanges are platforms that facilitate the buying and selling of cryptocurrency, either for fiat currencies, like the US dollar or between digital assets, like USDT and ADA. They function as trusted intermediaries in trades and often act as custodians by storing and protecting your funds. The top 3 in this sector are:

Binance Coin (BNB)

Crypto.com Coin (CRO)

FTX Token (FTT)

Decentralized Exchange

This consists of exchanges that are like centralized exchanges but without the need of “signing up” to the platform. Decentralized exchanges (DEX) are a type of cryptocurrency exchange that allows for direct peer-to-peer cryptocurrency transactions to take place online securely and without the need for an intermediary. The top 3 in this sector are:

Uniswap (UNISWAP)

Stellar Lumens (XLM)

Pancake Swap (CAKE)

DeFi (Decentralized Finance)

Decentralized finance is a system by which financial products become available on a public decentralized blockchain network, making them open to anyone to use, rather than going through middlemen like banks or brokerages. The top 3 in this sector are:

Uniswap (UNI)

Chainlink (LINK)

Aave (AAVE)

NFT (Non-Fungible Token)

A non-fungible token (NFT) is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. The top 3 in this space are:

Theta (THETA)

Chiliz (CHZ)

Decentraland (MANA)

Healthcare

Cryptocurrencies in this category are involved in providing healthcare services for their users. The top 3 coins in this sector are:

MediBloc (MED)

Solve (SOLVE)

Dentacoin (DCN)

Gambling

These are cryptocurrencies that provide online gambling services to their users. The top 3 in this space are:

FunToken (FUN)

Lotto (LOTTO)

Atari Token (ATRI)

Gaming

In this sector, cryptocurrencies offer gaming services to their users. They involve tradable tokens that can be used in games and the real world. Top 3 are:

Decentraland (MANA)

Enjin Coin (ENJ)

The Sandbox (SAND)

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