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What Is A Cryptoasset?
A cryptoasset is a digital asset that uses cryptography, distributed ledgers, and peer-to-peer technology to function as a means of exchange or store of value.
Cryptoassets function as a store of value or medium of exchange by leveraging blockchain technology to secure transaction records. There are four common types of crypto assets:
- Cryptocurrencies: A digital currency that uses cryptography for security, making it nearly impossible to counterfeit. Cryptocurrencies exist on a blockchain, which at its core is a distributed database shared among a network of computer systems. The blockchain serves as a decentralized ledger of all transactions made with a cryptocurrency. Bitcoin (BTC) is the first cryptocurrency and the largest by market capitalization.
- Utility tokens: A utility token is a digital asset created for spending within a particular blockchain ecosystem. The utility token grants its holders access to a product or service provided by the token issuer. For instance, Filecoin is a crypto company that offers decentralized digital storage. To save data on the decentralized storage space on its network, customers need their utility token Filecoin (FIL). Utility token holders may still use them as a means of exchange, but that is not the primary purpose of the utility token.
- Security tokens: A security token is a digital form of traditional securities, such as stocks, real estate, and bonds. Buying a security token is similar to buying the shares of a company, including profit share and voting rights. An example of a security token is Blockchain Capital (BCap).
- Stablecoins: A utility token is a digital asset that has its value pegged to a traditional fiat currency, such as the US dollar. Stablecoins offer price stability, unlike other crypto assets that can be highly volatile. An example of a stable coin is Tether (USDT), a cryptocurrency pegged to US dollars. As of November 2021, USDT is the fourth-largest cryptocurrency by market capitalization.
Ethereum (ETH) is an example of a crypto asset and the second-largest by market capitalization. Ethereum powers various innovative applications in finance, gaming, identity management, prediction markets, and supply chain management.
Dogecoin (DOGE) is another example of a crypto asset started as a joke based on a popular meme featuring a Shiba Inu – a Japanese dog breed.« Back to Glossary Index
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