Unraveling the World of Cryptocurrencies!

For the past 4 months, I have been hearing a lot about Crypto And, I saw many individuals who don't even have a single clue about Crypto are Investing in it, which I found to be too Ludicrous.

So, I thought why not dig deeper into the world of crypto & Provide some Insights into it for y'all.

Disclosure: I don't invest in Cryptocurrencies neither have plans to own one in the Future. The Analysis is only meant for educational purposes.

So, now let's get into it:

Have you ever wondered what gives cryptocurrency its value?

Well... The answer is not so simple but, let me simplify it for you!!

The Answer lies in its Use Case or, The Category it falls under. Each Crypto Category has its own pros & cons so, without further ado, let's Unravel the mystery which is the world of Crypto:

1. Store of Value (SoV) Crypto: This Crypto Category is meant to hold or increase their Purchasing power, over time. They are meant as a hedge against Inflation & helps your money in retaining or even increasing its Purchasing Power. 

• The Primary Advantage SoV offers is that, they are much safer investments than other Crypto's & they are likely to go up in $ Value over time. The Distribution of SoV cryptos tells if the Crypto in question is actually an SoV crypto or not. (bitcoin has a pretty equitable distribution)
• The Primary Disadvantage SoV offers is that Store of Values doesn't do much besides protecting your purchasing power over time & makes it possible to send it to other people without a Middleman. Limited Functionality may even lose Bitcoin - It's Crown of being the Biggest Crypto in terms of Market Cap.

Eg: Bitcoin (Fun Fact: Bitcoin has a Maximum supply of Just 21 Million BTC) Bitcoin is also referred to as Digital Gold & Bitcoin has the Largest cryptocurrency by the Market cap (Currently around 689 Billion USD) & Almost other Cryptocurrency's Price is dependent upon Bitcoin's Price I.e. If Bitcoin Crashes, everything else Crashes. 

2. Smart Contract Crypto (My Favourite to Dominate the Crypto Market): They are designed to be programmable with less emphasis on storing value. They offer a Radical Alternative to the Financial Infrastructure we use today such as Financial Services (like Buying, Selling or Investing) we do through a Centralized Platform which may have high risks of data theft.

• Smart Contract Cryptos make it possible to create a Combination of Multiple Smart Contracts or, Decentralized Applications/DAP's. (Smart Contract once created can never be Modified & Impossible to shut down as it encompasses millions of computers spread around the world) & Smart Contract Cryptos also help create tokenized assets. (fungible or non-fungible tokens)
• You only need an Internet Connection to get Access to these DAP's. (No Personal Info. Required) All Activities occur from Person to Person i.e. All activity is private.
• Smart Contract Cryptos get their value derived from their Utility in Payment for Smart Contract & DAP Transactions. 
• Most Smart contract Cryptos do not have a max. supply.
• The Primary Advantage is that their value is tied to the Size & adoption of the DAP & Token Ecosystems built on their Blockchains. (More Adoption = More User Base = More Value)
• The Primary Disadvantage is that You do not know which Smart contract crypto is going to get the most adoption & hence generate the most value for its users.

Eg: Most Prominent are Ethereum (ETH) & Binance Smart Chain (BNB)

3. Oracle Crypto: They make it possible to bring real-world data (such as the real-time Price of Stocks on Indexes) to smart contract cryptocurrency blockchains. Centralized Apps use centralized data feeds like API while Real-world data is provided to Smart Contract Crypto (for their DAP's to have a real-world use case) via Oracle Cryptocurrencies. 

• Data Feeds Oracle Cryptos provide are Decentralized. 
• Pricing is Decided via A Dozen of Individuals or Institutions will tell Oracle the Price & Oracle will use the average of these prices.
• The Primary Advantage is that Demand for their Tokens is gonna grow in tandem with Smart Contract Cryptos.
• The Primary Disadvantage is that Almost all of them have allocated enormous amounts to their Teams which developed them & Private Investors. (Price band doesn't move much as when prices go higher, these individuals will start selling them which, in return will bring the price to low points again)

Eg: Chainlink - Most adopted One (Market Cap of 12 Billion USD)

4. Payment Crypto (My 2nd favorite to dominate Crypto Market): They aim to replace the current payment systems (like VISA/Mastercard) we use today, and sometimes use smart contract technology to do this. They help in making payments in milliseconds and at fraction of the cost which, normal payments systems may charge. (No Middleman)

• The Primary Advantage is that they have high chances of adoption as they have the most lucrative use case.
• The Primary Disadvantage is that they can't replace the regular currencies we use today due to a lack of stability & transparency.

  Eg: Bitcoin Cash, Dash, Terra & Telcoin - Some of these payment cryptos feature elaborate smart Contracts & DAP's ecosystems focused on payments.

5. Privacy Crypto: They are designed to preserve your privacy when making transactions or using DAP's. They are in demand as All Crypto Blockchains are publicly viewable i.e. every transaction which is taking place in real-time can be viewed. Identity is not connected to your Crypto address but, it's not hard to figure out which crypto addresses you own. (If you have used an Exchange or an App that required personal information to purchase crypto which means your real-world identity can be revealed) - Shocking yet true!

• Private Cryptocurrencies seek to address these issues.
• The Primary Advantage is that it Provides Secrecy & are extremely well designed.
• The Primary Disadvantage is that they are frequently targeted by regulators as Illicit Activities can be carried out using this. (Leads to delisting on exchanges & problems in price discovery)

Eg: Secret network, Tornado cash, Monero, Zcash.

6. Exchange Tokens: Exchange tokens are owned & operated by the cryptocurrency exchanges they belong to. You can think of them as being a combination of A Membership subscription (Because they provide a lot of perks to its members) & Company stocks (the performance of exchange tokens depends on their popularity)

• The Primary Advantage is that they are highly likely to go up in price as Adoption Increases.
• The Primary Disadvantage is that their gains are comparatively slower than other cryptos & may fall if any regulator denounces them. (Like China did)

Eg: Binance coin

7. Meme Coins: They have no specific use case and exist just because of Hype & lofty promise of false profits. They have supplies in Billions or even 100's of Trillions.

• Don't even buy them & stay Away from them. These 0.000008 $ values can NEVER become a $ due to its absurd supply. (Referring to Shibu INU)

Eg: Dogecoin (Has a Supply of 129 Billion) & Shibu Inu (Has a Supply of 394 Trillion) - I would Categorise Anything Around 1$ is a MemeCoin.

Well... Hope you enjoyed learning about these Categories & Can now take decisions with Utmost Consideration.

If you liked this... Please don't forget to share this & let this knowledge reach as many people as possible.

If you have any doubts... Feel free to reach out to me!

à bient?t!!