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For a long time now, people have been well-acquainted with popular and trustworthy payment methods like bank transfers, credit & debit cards, or even Apple Pay. The latest arrival on the scene is ‘Cryptocurrency’, a promising and one-of-a-kind addition to the entire digital transaction experience.

Cryptocurrencies are a new paradigm for money. Their promise is to streamline existing financial architecture to make it faster and cheaper. Their technology and architecture decentralize existing monetary systems and make it possible for transacting parties to exchange value and money independently of intermediary institutions such as banks.

However, as a business you might be wondering if it’s really reliable to implement cryptocurrencies in your business whether as a means of payment or other business transactions. Let’s find out together.

  • What is Cryptocurrency?
  • Is Cryptocurrency Helpful for the Business?
  • Why Should Businesses Consider Using Cryptocurrency?
  • Is Cryptocurrency a Reliable Investment?
  • Which Cryptocurrency is the Most Reliable?
  • Why Should a Business Invest in Cryptocurrency?
  • What is the Purpose of Cryptocurrency?
  • What are Some of Examples of Cryptocurrency?
  • What are the Types of Cryptocurrency?
  • Are Cryptocurrencies Legal?
  • What can you Buy With Cryptocurrency?
  • How to Store Cryptocurrency

What is Cryptocurrency?

Cryptocurrency is an online or virtual currency that is fully secured by cryptography and allows users to purchase goods and services. It does not depend on banks for verifying any transaction, but instead maintains a public ledger of transactions as immutable blocks on the blockchain.

Read Also: Role of Currency in International Business

The word ‘cryptocurrency’ has been derived from varied encryption techniques that are extensively used to secure all transactions. The aim of this method of encryption, namely cryptography, is to offer safety and security.

The technology that powers it is called blockchain – a decentralized network that manages and records transactions by connecting multiple computers. Bitcoin is considered to be a trendsetter and the most traded cryptocurrency that has turned out to be the key driver of investor interest.

While Bitcoin and Ether have earned humongous popularity, other notable cryptocurrencies on the rise are Litecoin, Polkadot, Cardano, and many more. Today, many businesses have started opting for cryptocurrencies as a potential payment method.

The recent upsurge in the value of bitcoin has demonstrated cryptocurrency to be a promising and viable investment option. This is because cryptocurrencies offer global access, individual ownership, quality speed, enhanced adaptability, security & autonomy, affordable cost of a transaction, protection from inflation & fraud.

Is Cryptocurrency Helpful for the Business?

there is a growing interest among business owners in leveraging digital assets for several purposes such as operational, investment, and transactional. As a result, a number of businesses across the world have already accepted the creation of the first decentralized peer-to-peer payment system, collectively known as ‘cryptocurrencies’.

With digitalization, most businesses are now using some form of virtual currency or credit. Again there is a good percentage of businesses worldwide accepting Cryptocurrency as their way of transaction. But, there are several opportunities as well as challenges that businesses face with this new form of digital currency transaction.

But, before you think of investing in cryptocurrencies and digital assets, you must gather proper knowledge of what crypto can do for your company or business.

  • Crypto claims to provide access to new demographic groups by offering a more cutting-edge clientele that values transparency in the transaction. This is the reason why crypto is getting momentum among the new generation. One study shows that more than 40% of customers who pay with crypto are new customers. 
  • Crypto helps businesses spur international awareness along with helping companies acquire a potential space for a future.
  • Crypto can effectively help businesses get access to new capital as well as to new asset classes.
  • Most importantly, crypto is designed with certain functionalities that you can hardly find with a traditional system such as programming money, accurate revenue-sharing, etc.
  • Nowadays, there is a general trend of potential clients and vendors to engage by using crypto as it assures seamless transactions.
  • Moreover, crypto can help businesses effectively balance their assets, which may result in inflation.

So, if you are one of those who think that cryptocurrencies are not going to stay in the future, it is your misconception. Instead, the graph shows that it is gaining more and more popularity day by day. 

Why Should Businesses Consider Using Cryptocurrency?

The Cryptocurrency market has seen evolving dramatically over the past few years and a recent study shows that there are more than 2,300 US companies that have accepted Cryptocurrency as well as Bitcoin as the transaction process of their businesses. But, it needs a clear understanding of your purpose and an expert hand to help you prepare and embark on such a change.

So, it is highly recommended to Hire Blockchain Developer with whom you can engage in thoughtful discussions and then move ahead most professionally. Though there are many businesses still relying on traditional currency payments, there is no denying the fact that cryptocurrencies can effectively help businesses to accelerate their progress over their potential competitors. How? Let’s find out:

  • Increase Reach: Accepting cryptocurrencies largely opens up a whole new market in front of business owners. It positively impacts the reputation, sales, and overall productivity of a business. Moreover, Cryptocurrency is the most hassle-free and convenient way of transaction that everyone will like.
  • Reduce Transaction Costs: Cryptocurrencies enable businesses to deal directly with customers without any third-party involvement. So, it is very obvious that the cost of a transaction is also very low. Thus this transaction process is not only apt for the large businesses who are trying to reach their presence in the international market, but also helpful for the small businesses that are highly sensitive to small cost differences. With the help of such a transaction procedure, small businesses will be able to adjust their product prices and compete more favourably in the market.
  • Simplify International Transactions: Though this digital era opens up a large space for businesses to trade internationally, it is not that easy. Businesses face a lot of barriers and high-cost payment processing. Here comes the importance of cryptocurrencies that make it possible for business owners to trade globally more profitably without overpricing their products. 
  • Solve the Problem of Chargeback Fraud: Chargebacks are a significant problem for businesses. If you are a business owner, you may have faced such a situation when customers purchase a product from you and then cancel the payment.
    This can lead to considerable losses for the businesses. But, fortunately, Cryptocurrency can help you deal with such things as payment records on the blockchain system are permanent and irreversible. It simply means that with such a system, there is no way for the customers other than to contact the business owner directly in case they want a refund.
  • Protects Privacy: One of the most significant downsides of digitalization in business is the issue of cybersecurity such as identity theft and loss of finances. But Cryptocurrency effectively deals with such issues. The transaction through Cryptocurrency offers a great deal of privacy by allowing both the business owners and the customers to decide the kind and amount of information they will provide. 
  • Attracts New Customers: Being a comparatively new method of payment, cryptocurrencies attract the newer generation by offering them as an effective option for the transaction. 

Is Cryptocurrency a Reliable Investment?

While it is important to remember that no investments are genuinely safe, cryptocurrencies in that regard as well have shown a certain amount of risks. But they have also proven to be a lucrative investment for many people today. Investments in cryptocurrencies are not as complex as stock investments, where numerous stocks are available to confuse us every day.

The bottom line is that cryptocurrencies can be safe, but if not taken appropriate safety measures, they can be hacked as well. There are possible risks and uncertainties with investments and we can’t deem any virtual currency investment to be unsafe for that.

Buying and selling cryptocurrency does not always have to be risky if the trader thoroughly understands the market and treats his coins with care. At present, there are numerous cryptocurrency options available to us but not all options are safe.

Taking a certain amount of precaution is mandatory before investing your hard-earned money into cryptocurrency. It is exceedingly essential to conduct strong background research on the creator of the coin, whether they are at all affiliated with well-known brands, whether their screening processes are rigorous or traded on safe exchanges.

There can be serious repercussions if one does not apply the best practices for coin management to prevent hackers. With the growing popularity and wide adoption of cryptocurrencies, they have come under the radar of cyber-criminals.

Many notable instances have occurred over the past few years where cryptocurrency owners have lost their coins or have not able to recover them – a downside to digital or virtual currency not being backed by a central bank or Government. Therefore, a very simple solution to prevent losses due to unauthorized access is to store cryptocurrency in an offline device such as a ‘cold storage’ device.

Cold storage is a proven way to hold cryptocurrency tokens offline, thereby protecting them from theft. The most basic method of cold storage is a paper wallet or an external hard drive for storing the address and the key required to access the particular currency.

What is equally important is to access the cryptocurrency and other relevant information only during the time of the trading operation and for them to be disconnected after use. This can make it convenient to use and store cryptocurrencies with minimal risks, ensuring safety and reliability.

Which Cryptocurrency is the Most Reliable?

There are a few aspects of cryptocurrency like the relatively high volatility and unpredictability that can elicit a cautious and measured response amongst existing and potential investors alike. There are also cryptocurrencies whose value rarely fluctuates and they are known for their stability compared to others like Bitcoin, Ethereum, and more. Such coins are called ‘Stable Coins’.

Stablecoins are cryptocurrencies that are pegged or tied to a stable external asset. The most popular stablecoins are tied to fiat currencies like the US Dollar, precious metals like gold, or at times even to other cryptocurrencies. 

Stablecoins are also known to maintain a reserve of the asset they’re pegged to. For example, a stablecoin tied to USD with 5,000,000 coins in circulation will have the equivalent in cash in holding at a bank. 

This acts as collateral and if an investor sells stablecoins, its equivalent is taken out of the reserve. It also means unlike other cryptocurrencies this is backed by an asset that has more than just perceived value. 

These features allow stablecoins to avoid the unpredictability and volatility associated with other cryptocurrencies. 

The different types of collateral that stablecoins are pegged to include:

  • Fiat currencies like the USD or Turkish Lira
  • Precious metals like gold and silver
  • Other cryptocurrencies
  • Debt instruments like bonds 

In fact, you’ll notice that the value of popular stablecoins is equal to USD 1 or close. However, the collateral opens up some stablecoins to certain risks. 

Since the collateral is stored in a bank more often than not, there’s counterparty risk (3rd party risk). There may even be trust-based issues stemming from whether the stablecoin has a reserve as it claims to. 

In many ways, it’s the marriage of modern-day blockchain-based cryptocurrencies and the old school banking system. 

While this may make it undesirable for many crypto purists, it makes stablecoins a great stepping stone for new investors to enter the world of cryptocurrencies without taking an unprecedented risk.

All things considered, stablecoins appeal to crypto investors because of factors like:

  • Stability in cryptocurrency
  • Safety of being backed by real-world assets
  • Comparably low fees
  • A certain degree of regulation (fiat-based)

Now that you know everything about stablecoins, it’s time to move on to the list of the biggest and most stable cryptocurrencies in 2023 by market cap from the world of stablecoins. 

1. Tether

Tether (USDT) is one of the oldest stablecoins in the crypto market. It was launched in 2014. Tether is also the 4th most valuable crypto by market capitalization and one of the most stable cryptocurrencies.

  • Name: Tether
  • Ticker: USDT
  • Price: $1
  • Market Cap: $82.44 Billion

Tether is pegged 1 to 1 to the USD, which simply means that the value of one Tether USDT is equal to USD 1. Tether claims to have reserves of cash and cash equivalents to back every USDT on the market. 

2. USD Coin

USD Coin (USDC) is also pegged 1 to 1 to the USD. It was introduced back in 2018 and is managed by Circle and Coinbase through the Centre Consortium that they co-founded together.  

  • Name: USD Coin
  • Ticker: USDC
  • Price: $1
  • Market Cap: $51.35 Billion

USDC is the 9th most valuable cryptocurrency in the world. USD Coin claims to have a mix of cash and cash equivalents along with US Treasuries in reserve to back every USDC in circulation. 

3. Binance USD

Binance USD (BUSD) is a stablecoin offered by the largest crypto exchange in the world Binance. BUSD is approved for use by the New York State Department of Financial Services (NYDFS).

  • Name: Binance USD
  • Ticker: BUSD
  • Price: $1
  • Market Cap: $17.88 Billion

1 BUSD is equal to 1 USD by design and investors may incur relatively low charges when buying or selling it. Binance USD is the 19th most valuable crypto in the world. 

4. TerraUSD 

TerraUSD (UST) is a stablecoin offered by Terra. It is designed to track the value of 1 USD, that is, it’s 1 to 1 pegged to the USD. TerraUSD is the 31st most valuable cryptocurrency by market cap. 

  • Name: TerraUSD
  • Ticker: UST
  • Price: $1
  • Market Cap: $16.70 Billion

TerraUSD’s primarily used for earning returns with Luna, Terra’s staking and governance reward token system. Other use cases include earning returns through arbitrage opportunities.  

5. Dai

Dai (DAI) is a stablecoin that’s unlike others on the list so far. Dai is pegged to the USD but is backed by ether tokens. Dai was introduced in 2015 by MakerDAO and is the 36th most valuable crypto by market cap.

  • Name: Dai
  • Ticker: DAI
  • Price: $0.9936
  • Market Cap: $9.45 Billion

Here’s a bonus list of the most stable cryptocurrencies in 2022.

NameTickerPrice (In USD)Market Cap (In USD)
TrueUSDTUSD0.99931.24 Billion
Pax DollarUSDP0.9993945.18 Million
Neutrino USDUSDN0.9748561.63 Million
Reserve RightsRSR0.03608479.48 Million

Why Should a Business Invest in Cryptocurrency?

It has become increasingly common for mainstream businesses to get involved in the cryptocurrency space. For example, Tesla purchased $1.5 billion in Bitcoin in 2021, adding that the company would also start accepting Bitcoin as payment for its products.

Bitcoin and other cryptocurrencies are becoming more than a confusing trend or a risky investment opportunity–businesses of all sizes are accepting crypto as a viable payment alternative.

It’s important to consider the pros and cons of investing in crypto. For example, does it fit into your business plan, and will it help your business meet its financial goals? Is crypto too confusing for my business to get involved with?

Consider the following pros associated with crypto investments to make the decision a bit easier.

Reduced Transaction Expenses

Because crypto essentially eliminates the third parties you would work with for traditional transactions, it can reduce your cost of doing business. Crypto allows you to make or receive payments directly to or from clients without an intermediary. If there are any transaction fees, they are typically very low.

Decentralized Form of Payment

Cryptocurrency is considered decentralized, meaning there’s no governing body tracking or storing your transaction history. Accepting traditional payments is very common, but it also means your financial history could be susceptible to online hacks.

Inherently Secure Technology

The main technology behind cryptocurrency transactions is blockchain, a distributed ledger that stores digital data. Blockchain is an inherently secure technology that is very difficult to tamper with or manipulate. All transactions are authenticated to be sure they are correct.

Plenty of Crypto Platforms to Use

There are already several types of crypto platforms available, and more will likely emerge. Exchange platforms are easy for businesses to use and the market runs 24/7, so you can make transactions at any time of the day. This could be helpful if you have international customers or clients in different time zones.

Portfolio Diversification

Crypto is rapidly growing and more consumers are becoming aware of the benefits of investing in crypto. Businesses that invest in crypto can diversify their company’s investment portfolio and even help you garner new customers from various demographic groups.

Cons of Investing in Cryptocurrency

With most investments, it’s also important to consider the potential disadvantages your business could face. Let’s discuss why you may not want to invest in crypto.

Highly Volatile

The crypto market is highly volatile, so you are taking on risks when investing in crypto. The value of cryptocurrencies can vary significantly depending on several different factors. For example, a major crypto hack can occur, as seen with the recent Ronin hack. The Ronin Network lost around $622 million due to the breach.

Not Widely Accepted (Yet)

In general, crypto has not become entirely commonplace in the business world. When considering investing in crypto, you may want to learn more about your clients or customers and decide whether offering crypto payment options will benefit them. As mentioned in one of the statistics above, crypto is still foreign to some people.

Complex Setup

While setting up a crypto transaction channel is not extremely difficult, it does take some extra time and effort to get it up and running. You may need to set up your company’s crypto wallet or use a third-party service provider to handle this. While the setup process may not be a huge factor, it may turn you off from investing in crypto at the start.

Potential Scams

The technology behind crypto is still relatively new, and because it is decentralized, crypto regulations are still lacking. Cybercriminals may try to scam your business if they know you’ve invested in crypto. While this is not guaranteed to happen, it may sway your decision on whether or not to invest.

Deciding to invest in crypto as a business can be challenging. Hopefully, the advantages and disadvantages outlined above can help guide your decision-making and help you feel more educated about crypto investments.

What is the Purpose of Cryptocurrency?

It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments. Instead of being physical money carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries to an online database describing specific transactions. When you transfer cryptocurrency funds, the transactions are recorded in a public ledger. Cryptocurrency is stored in digital wallets.

Cryptocurrency received its name because it uses encryption to verify transactions. This means advanced coding is involved in storing and transmitting cryptocurrency data between wallets and to public ledgers. The aim of encryption is to provide security and safety.

The first cryptocurrency was Bitcoin, which was founded in 2009 and remains the best known today. Much of the interest in cryptocurrencies is to trade for profit, with speculators at times driving prices skyward.

Cryptocurrencies run on a distributed public ledger called blockchain, a record of all transactions updated and held by currency holders.

Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated mathematical problems that generate coins. Users can also buy the currencies from brokers, then store and spend them using cryptographic wallets.

If you own cryptocurrency, you don’t own anything tangible. What you own is a key that allows you to move a record or a unit of measure from one person to another without a trusted third party.

Although Bitcoin has been around since 2009, cryptocurrencies and applications of blockchain technology are still emerging in financial terms, and more uses are expected in the future. Transactions including bonds, stocks, and other financial assets could eventually be traded using the technology.

What are Some of Examples of Cryptocurrency?

There are thousands of cryptocurrencies. Some of the best known include:


Founded in 2009, Bitcoin was the first cryptocurrency and is still the most commonly traded. The currency was developed by Satoshi Nakamoto – widely believed to be a pseudonym for an individual or group of people whose precise identity remains unknown.


Developed in 2015, Ethereum is a blockchain platform with its own cryptocurrency, called Ether (ETH) or Ethereum. It is the most popular cryptocurrency after Bitcoin.


This currency is most similar to bitcoin but has moved more quickly to develop new innovations, including faster payments and processes to allow more transactions.


Ripple is a distributed ledger system that was founded in 2012. Ripple can be used to track different kinds of transactions, not just cryptocurrency. The company behind it has worked with various banks and financial institutions.

Non-Bitcoin cryptocurrencies are collectively known as “altcoins” to distinguish them from the original.

What are the Types of Cryptocurrency?

The four major types include utility, payment, security, and stablecoins. There also are DeFi tokens, NFTs, and asset-backed tokens. Of all cryptocurrencies, the most common are utility and payment tokens. These do not have their investment-backed or guaranteed by regulation.

TypeMain featureExamples
Utility tokens·Meant to provide access to platform service where they reside.Funfair, Basic Attention Token, Brickblock,Timicoin, Sirin Labs Token, and Golem.
Security tokensUsage and issuance governed by financial regulation.Sia Funds, Bcap (Blockchain Capital), and Science Blockchain.
Payment tokensUsed for paying for goods and services inside and outside their own platforms. Almost every crypto falls in this category.Monero, Ethereum, and Bitcoin.
Exchange tokensExchange tokens are native to crypto exchange platforms.Binance Coin or BNB token, Gemini USD, FTX Coin for FTX Exchange, OKB for Okex exchange, KuCoin Token, Uni token, HT for Huobi exchange, Shushi, and CRO for Crypto.com.
Non-fungible tokensNon-fungible tokens are cryptocurrencies with limited issuance that have unique identities and tokens that make them hard to copy or replicate.Good examples include Logan Paul’s video clips, Twitter Founder Jack Dorsey’s first tweets NFT, EVERYDAYS: The First 5000 Days drawings by Mike Winklemann, better known as “Beeple”, and several crypto kitties.

1. Utility Tokens

Utility tokens are thought of as coupons or vouchers but essentially are digital units representing a value on the blockchain. In other words, the token provides certain access to a product or service run or operated by the token issuer. A person can gain access by buying the token and can redeem it for a defined access value to the product or service.

  • The holder gains the right to product or service to an equivalent value of token but not ownership. For instance, they can access the product or service at discounted fees or for free as long as they hold the tokens.
  • In some jurisdictions, defining a cryptocurrency as a utility token means it is not under any financial regulation.
  • The main understanding is that they are not investment products and can lose value completely at the expense of the holder.
  • Utility tokens are better understood from a regulatory perspective in that they are not assumed to be regulated. The holder of the token is not holding an equivalent of stock or bond or other asset regulated under financial acts.
  • Applications include access to decentralized storage in a decentralized storage network, rewards tokens, and as currency for a blockchain.

Examples of utility tokens: Funfair, Basic Attention Token, Brickblock, Timicoin, Sirin Labs Token, and Golem.

2. Security Tokens

These are securitized cryptocurrencies that derive value from an external asset that can be traded under a financial regulation as security. They, therefore, are used for securitized tokenization of properties, bonds, stocks, real-estates, property, and other real-world currencies.

  • Therefore, because of the nature of transactions, their exchange, issuance, dealings, value, tokenization, backing, and trading must be controlled and governed by financial regulators to protect user investments.
  • The regulation, in such a case, exists to guarantee user funds and investments and to hold founders responsible.

Security tokens represent a stake, share in stock or equity, voting rights, and right to the dividend in the asset represented. Owners or holders receive part of the profit from the issuers’ or managerial actions and decisions.

  • They are issued through Security Token Offering (STOs)
  • Their applications include where investors need instant settlement, transparency in management, divisibility of assets, etc.

Security tokens are further divided into:

  • Equity tokens: These are similar to traditional stocks in form and operation except that ownership and transference happen digitally. Investors are entitled to dividends from managerial and issuer actions and decisions. Debt tokens represent short-term loans that carry pre-defined interest rates.
  • Asset-backed tokens: These are backed by real-world real estate, art, carbon credits, or commodities as underlying value. They carry characteristics of gold, silver, oil, etc. They are tradable, etc.

Examples of security tokens: Sia Funds, Bcap (Blockchain Capital), and Science Blockchain.

3. Payment Tokens

As the name suggests, payment tokens are those used for buying and selling goods and services on digital platforms without an intermediary, as happens in traditional finance and banking arenas. Of course, the majority of cryptocurrencies and tokens fall into this category, whether they are security or utility. However, not all utility tokens can be payment tokens.

  • Mostly hybrids of other tokens.
  • Payment tokens do not represent and cannot be invested in as securities. Hence, they do not fall under financial regulation as asset securities.
  • They may or may not guarantee holders’ access to any product or service now or in the future.

Examples of payment tokens: Monero, Ethereum, and Bitcoin.

4. Exchange Tokens

There may be debate about what exchange tokens are but are given the name for their issuance by and use in the cryptocurrency exchanges, which are crypto marketplaces for buying and selling and swapping tokens.

Although they can be used outside their native exchange environments, we primarily used them for facilitating exchange between other tokens or as gas utility payments on these exchanges.

  • Centralized exchanges with or without decentralized platforms or own blockchains can issue them.
  • They can be used for cheaper gas or fees payment, increasing liquidity, providing free discounts, governing blockchains for instance, for voting rights, or providing access to particular crypto exchange services.
  • For increasing liquidity, exchanges use them to lure people into participating in the projects.

Examples of exchange tokens: Binance Coin or BNB token, Gemini USD, FTX Coin for FTX Exchange, OKB for Okex exchange, KuCoin Token, Uni token, HT for Huobi exchange, Shushi, and CRO for Crypto.com.

5. Non-fungible Tokens

A non-fungible token is a digital certificate of ownership to a unique, non-replaceable item or one not tradeable with another, and one-of-kind asset on the blockchain.

It is developed using the same technology used in developing other types of tokens but mainly used to represent a work of art, photos, videos, audios, collectibles, real estate, virtual worlds, memes, GIFs, digital content like posts and tweets, fashion, music, paintings, drawing, pornography, academia, political items, film, memes, sports, games, or digital files of value but on the blockchain.

  • The first NFT was created in 2015 on the Ethereum blockchain.
  • The digital signature is created such that it cannot be exchanged for another.
  • They allow the holder to own an original item of a limited supply, originality, or edition.
  • Because of high value, the issues may be limited edition or not possible to reproduce or copy. Best NFTs are those where only one person or a few can own an original.
  • It helps artists, creators, and collectors, mainly, to sell their items.
  • They can be bought and sold in NFT marketplaces like OpenSea, Rarible, Foundation, and Decentraland.
  • The application includes popularity, monetizing wares, for royalty payment such that artists will receive a percentage of sales whenever the art is sold to a new user, partial ownership of land and expensive assets, auctioneering to raise capital and money such as Charmin and Taco Bell auctioneering of themed NFTs, creating unique moment memory or preserving histories, for market motives like trading, and celebrity issuing.
  • We can differentiate them from Initial Exchange Offering tokens, which are normal Initial Coin Offering tokens offered through a crypto exchange promotion.

Examples of NFTs: Logan Paul’s video clips, Twitter Founder Jack Dorsey’s first tweets NFT, EVERYDAYS: The First 5000 Days drawings by Mike Winklemann, better known as “Beeple”, and several crypto kitties.

6. DeFi Tokens Or Decentralized Finance Tokens

Decentralized finance refers to financial applications or dApps built on the blockchain or distributed ledger, which makes them distributed and those that render financial and money control directly to the user while allowing them to transact on a global scale with peers to peer methods and access to global markets.

These DeFi apps are accessible to anyone with internet connectivity. Each DeFi app is powered by a token economy behind which there is a native token. These tokens are a form of programmable money where developers can program logic into payments and transaction flows.

  • Most of DeFi tokens are currently based on the Ethereum blockchain. Other blockchains with support for DeFi include Stellar, Polygon, IOTA, Tron, and Cardano.
  • Through these tokens, people can earn, lend, borrow, long/short, earn interest, save, grow and manage the portfolio, buy insurance, invest in securities, invest in stocks, invest in funds, send and receive monetary value, trade value on decentralized exchanges, invest and buy assets, sell assets, and more.
  • Examples of well-known decentralized finance tokens include Solana, Chainlink, Uniswap, Polkadot, Aave, and many others. Some categories of DeFi applications include decentralized lending apps, decentralized exchanges, decentralized storage sharing, etc.
  • The most powerful feature about DeFi tokens is smart contracts, allowing anyone to define, write, program, and execute transactions rules based on certain conditions and have transactions executed when those conditions are met.

7. Stablecoins – Fiat And Other Types

As the name suggests, these are tokens of a stable value in nature in that their value is somewhat predictable in the sense that it remains the same almost all the time. Stable tokens or stablecoins as they are mainly called, are backed by a stable or fairly value-stable asset like fiat. So we have dollar and Euro-stabilized or backed stable coins, gold and other precious metals, oil, and commodity-backed tokens.

  • Stable tokens help the world to rid of volatility in assets or even other digital currencies.
  • They are backed on a defined ratio and the asset backing them must be kept in reserves as per the defined ratio. We have those backed by fiat, crypto, commodity, and algorithmic stablecoins which use software and rules to maintain the stable peg with fiat or another asset.

Examples of stablecoins: Tether, which is backed on a 1:1 ratio with USD fiat, the same as TruSD, Gemi Dollar, and USD Coin, and Paxos. Kitco Gold, Tether Gold (XAUT), DigixGlobal (DGX), and Gold Coin (GLC) also serve as stablecoins backed by gold. Algorithmic-backed stable coins include Ampleforth (AMPL), DefiDollar (USDC), Empty Set Dollar (ESD), Frax (FRAX).

8. Asset-backed Tokens

Asset-backed tokens are a category of cryptocurrencies whose underlying value is backed by a real-world asset that could be other money, stock, bonds, real estate, gold, and precious money. They are used to digitally represent and trade value for these underlying assets but on blockchains.

Most of these are offered as security tokens due to the nature of transactions involving the underlying assets. They are mostly issued through the Equity Tokens Offer (ETO).

  • They could be backed at any ratio depending on the issuer.
  • Precious metal-backed tokens include PAXG and DGX which are backed by gold. Read more on other gold-backed tokens from our other tutorial.
  • Company share-backed tokens allow tokenizing of company shares and trading them on crypto exchanges. Examples include Quadrant Token which tokenizes the Quadrant Biosciences Inc equity, Neufund, The Elephant Private Equity Coin, Slice, Document, BFToken, The Dao, and RRT Token
  • Tokenized commodity tokens are also known as crypto commodities represent the value of commodities and allow tokenization and trading of oil, natural gas, renewable energy, wheat, sugar, etc.

Examples of asset-backed tokens: OilCoin which tokenizes barrels of oil held in reserve, Petroleum Coin, Ziyen Inc Oil token, etc. The Energy Web Token (EWT) tokenized energy, Green Energy Token by WPP, etc. Wheat Token Coin for wheat tokenization, etc.

9. Privacy tokens

As the name suggests, these are cryptocurrencies used for privacy applications because their code encourages better privacy than would Bitcoin and mainstream crypto.

There are many reasons one would need better privacy in crypto transactions – first as a right to privacy, security investigations, and highly sensitive transactions, although they are also used for crime and scams.

  • These cryptocurrencies incorporate different methods of ensuring transaction privacy, e.g. coin mixing, anonymity techniques like CoinJoin, and offline transactions. This is in addition to techniques employed in mainstream crypto e.g. lack of tying real-world names with crypto addresses and blockchain encryption.

Examples of privacy tokens: Monero, Zcash, Dash, Horizen, Beam, and Verge.

Are Cryptocurrencies Legal?

Fiat currencies derive their authority from the government or monetary authorities. For example, each dollar bill is backstopped by the Federal Reserve.

But cryptocurrencies are not backed by any public or private entities. Therefore, it has been difficult to make a case for their legal status in different financial jurisdictions throughout the world. It doesn’t help matters that cryptocurrencies have largely functioned outside most existing financial infrastructure. The legal status of cryptocurrencies has implications for their use in daily transactions and trading.

In June 2019, the Financial Action Task Force (FATF) recommended that wire transfers of cryptocurrencies should be subject to the requirements of its Travel Rule, which requires AML compliance.

As of December 2021, El Salvador was the only country in the world to allow Bitcoin as legal tender for monetary transactions. In the rest of the world, cryptocurrency regulation varies by jurisdiction.

Japan’s Payment Services Act defines Bitcoin as legal property. Cryptocurrency exchanges operating in the country are subject to collect information about the customer and details relating to the wire transfer. China has banned cryptocurrency exchanges and mining within its borders. India was reported to be formulating a framework for cryptocurrencies in December.

Cryptocurrencies are legal in the European Union. Derivatives and other products that use cryptocurrencies will need to qualify as “financial instruments.” In June 2021, the European Commission released the Markets in Crypto-Assets (MiCA) regulation that sets safeguards for regulation and establishes rules for companies or vendors providing financial services using cryptocurrencies.

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Within the United States, the biggest and most sophisticated financial market in the world, crypto derivatives such as Bitcoin futures are available on the Chicago Mercantile Exchange. In the past, the Securities and Exchange Commission (SEC) took the stance that Bitcoin and Ethereum were not securities; however, in September 2022, SEC Chair Gary Gensler stated he believes cryptocurrencies are securities. This stance implies that cryptocurrency’s legal status may become subject to regulation.

What can you Buy With Cryptocurrency?

When it was first launched, Bitcoin was intended to be a medium for daily transactions, making it possible to buy everything from a cup of coffee to a computer or even big-ticket items like real estate. That hasn’t quite materialized and, while the number of institutions accepting cryptocurrencies is growing, large transactions involving it are rare. Even so, it is possible to buy a wide variety of products from e-commerce websites using crypto.

Here are some examples:

Technology and e-commerce sites:

Several companies that sell tech products accept crypto on their websites, such as newegg.com, AT&T, and Microsoft. Overstock, an e-commerce platform, was among the first sites to accept Bitcoin. Shopify, Rakuten, and Home Depot also accept it.

Luxury goods:

Some luxury retailers accept crypto as a form of payment. For example, online luxury retailer Bitdials offers Rolex, Patek Philippe, and other high-end watches in return for Bitcoin.


Some car dealers – from mass-market brands to high-end luxury dealers – already accept cryptocurrency as payment.


In April 2021, Swiss insurer AXA announced that it had begun accepting Bitcoin as a mode of payment for all its lines of insurance except life insurance (due to regulatory issues). Premier Shield Insurance, which sells home and auto insurance policies in the US, also accepts Bitcoin for premium payments.

If you want to spend cryptocurrency at a retailer that doesn’t accept it directly, you can use a cryptocurrency debit card, such as BitPay in the US.

How to Store Cryptocurrency

Once you have purchased cryptocurrency, you need to store it safely to protect it from hacks or theft. Usually, cryptocurrency is stored in crypto wallets, which are physical devices or online software used to store the private keys to your cryptocurrencies securely. Some exchanges provide wallet services, making it easy for you to store directly through the platform. However, not all exchanges or brokers automatically provide wallet services for you.

There are different wallet providers to choose from. The terms “hot wallet” and “cold wallet” are used:

  • Hot wallet storage: “hot wallets” refer to crypto storage that uses online software to protect the private keys to your assets.
  • Cold wallet storage: Unlike hot wallets, cold wallets (also known as hardware wallets) rely on offline electronic devices to securely store your private keys.

Typically, cold wallets tend to charge fees, while hot wallets don’t.


Cryptocurrencies are digital assets that are secured by cryptography. As a relatively new technology, they are highly speculative. So, if you plann to incorporate it into your business, it is important to understand the risks involved before making an investment.

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