Know The Types of Crypto Assets and Their Differences With Bitcoin
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Know the types of crypto assets and their differences with Bitcoin

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Know the types of crypto assets and their differences with Bitcoin

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There are many types of crypto assets that we will study in this article Indodax.Academy. So that you don’t get confused anymore and add to your insight when trading crypto assets, you need to understand them.

There are thousands of crypto assets around the world. You know that Bitcoin is the most well-known crypto asset. Then there are Ethereum, and others. Bitcoin and Ethereum can be mined (mining) like gold. It’s just digital. However, unlike the two, there are many crypto assets that are not acquired by mining.

Because each type of crypto asset is different. How to get it is also different. There is also a grouping of tokens and coins. There are also stablecoins. What is that?

Below will be explained the types of crypto assets based on their classification.

Proof of Work (POW)/Mining

Proof of work (POW) or mining is a way to get crypto assets by mining. Bitcoin is one of the cryptos obtained by POW. Likewise Ethereum, Litecoin, and others.

How to mine is by logging into the site or web mining address on a computer and using the internet. However, mining can only be used with specialized computers.

Miners computers usually use a lot of VGA. It can reach hundreds of millions to make a RIG or VGA rack to mine coins maximally.

After miners get reward coins from mining, the crypto assets are sold on the marketplace.

Usually, the trend or price movement of mining crypto assets follows Bitcoin. Because many alternative coins (altcoins) are forks of Bitcoin.

Proof of Stake (POS)

Proof of Stake coins are usually used for DeFi platform payments. There are YFI, UNI, AAVE, SFI, SUSHI and others.

Proof of Stake or staking / collateral is a way to get crypto assets. This is different from mining. This crypto asset is obtained by pledging other crypto assets. So, not with mining.

The advantages of obtaining PoS crypto assets compared to mining. Because only with a regular computer and internet connection, you can get crypto asset rewards. No need to be complicated and expensive by using a computer with a RIG VGA worth hundreds of millions.

Interestingly, Ethereum will evolve into Ethereum 2.0. Later, ETH will be obtained by POS, not by POW.

The price increases for types of PoS crypto assets are very volatile. He can improve dramatically in a day or two. Then the price will return to its origin afterwards. It takes careful observation for you to trade in this type of crypto asset.

Stablecoin and Unstablecoin

Stablecoins are a type or classification of crypto assets based on price movements. As the name implies, stablecoins are stable coins. The price movement is not too high, it’s just that much.

Stablecoins also adopt the price of a commodity. For example USDT and USDC in the Indodax market. USDT is used as a means of payment because it is equal to or 1: 1 with the US dollar (USD).

This is the same as the IDK crypto asset which is 1: 1,000 at the price of Rupiah. IDK is more used to transfer money abroad.

So, stablecoins will not experience a drastic increase and decrease in price. The movement of the stablecoin price is just that much. If your trading balance is still minimal, you will not get big profits and losses if you trade on stablecoins.

Meanwhile, unstablecoin is a crypto asset that moves fluently or a type of crypto outside of stablecoins. Bitcoin, Ethereum and other crypto assets that experience drastic price fluctuations are not a type of stablecoin.

Coin and Token

Well, this time, Indodax Academy will discuss the classification or types of crypto assets based on the types of coins and tokens. The two are clearly different.

Coin is a type of crypto asset that works on its own network or platform. Like Bitcoin which works on the Bitcoin network and Ether (ETH) which works on the Ethereum network. Coins are usually used as an exchange tool in the real world and for projects outside the real world. As for the management of bank funds and others. Like XRP and XLM which are crypto assets. DOGE is also a type of coin because it is a network payment instrument outside the blockchain project.

Then, what is a token?

A token is a type of crypto asset that stands on top of a blockchain project. For example, for DeFi platform payments, such as SUSHI, YFI, UNI and others. USDT and USDC are crypto assets. Because both are crypto assets that are often used for payments on trading platforms such as Indodax, and others. Although both of them adopt the value of the US dollar (USD).

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