Altcoins exist in a variety of flavors and categories, depending on their functions and consensus procedures. Here's a quick rundown of some of the most significant:
Mining-based altcoins are created through the process of mining. To construct blocks, the majority of mining-based cryptocurrencies use Proof-of-Work (PoW), a process in which systems generate new currency by solving challenging challenges.
Since its inception, cryptocurrency trading and usage have been distinguished by volatility. By pegging their value to a basket of goods, such as fiat currencies, precious metals, or other cryptocurrencies, stablecoins try to lessen overall volatility.
Security tokens are similar to stock market securities, with the exception that they have a digital origin. Security tokens are similar to traditional equities in that they offer investors equity in the form of ownership or a dividend payout.
Meme coins, as their name suggests, are based on a joke or a witty parody of other well-known cryptocurrencies. They usually gain popularity in a short period of time, with renowned crypto influencers and ordinary investors aiming to profit from short-term gains generally hyping them online.
Within a network, utility tokens are utilised to deliver services. They could be used to buy services, pay network costs, or redeem prizes, for example. Utility tokens, unlike security tokens, do not pay dividends or require an ownership investment.