Since the emergence of Bitcoin in 2008, new developments have followed one after another, with countless projects arising and proposing solutions to different problems by using blockchain technology. New currencies, tokens with different use cases acquired value as a result of their exchange.
Each cryptocurrency could be seen as a proposed solution to a given problem.
The birth of bitcoin, for example, is linked to the desire to create a highly secure means of payment, a way to transfer value with no intermediaries. Unlike the fiat currencies that dominated the world then and now, bitcoin is eminently scarce: its issuance will never grow beyond a pre-established magnitude, which constitutes a strength.
Monetary application was the first popularized use case for blockchain technology, but by no means the only one. In 2014, Ethereum was born.
Ethereum allows smart contracts to be executed on a public blockchain. Smart contracts consist of contracts between parties established in computer code that are executed reliably, without third-party intermediaries, provided that conditions established in advance are met.
It is now possible thanks to Ethereum to develop decentralized applications, which do not reside on a single server but on a public blockchain. The possibilities are varied: from hosting multiple applications that today are developed in the centralized web, to migrating many other processes that today are carried out in the physical world and require trust or intermediaries for their realization.
Ether (ETH) is the cryptocurrency used to pay the network fees. Naturally, the use of the platform and speculation about the network's potential has raised interest in its token, which today ranks only behind bitcoin in market capitalization.
Like Ethereum, the potential of decentralized applications (DApps) thanks to the use of smart contracts motivated the development of different platforms that share its purpose but introduce changes in form or substance. Most of them in turn have a native token, used for network fees.
Thus, Binance Smart Chain gave birth to the BNB token, Cardano to the ADA token, Polygon to MATIC, Polkadot to DOT, Solana to SOL, and many others that coexist and seek to respond to a given problem.
However, the use cases of cryptocurrencies do not end there. There are tokens that work mostly -and sometimes exclusively- for the governance of a system. Usually, through the holding of a token, users have access to make decisions and vote on proposals.
It is an incentive scheme that seeks to align the interests of an organization and its members at the same time, solving the coordination problem in the absence of authority or hierarchical structure.
An example is the MKR token, which enables the governance of the Maker protocol to be exercised. Token holders can make relevant decisions about the system, such as the level of collateral needed to issue DAI, a dollar-pegged stablecoin.
By stablecoin we refer to any cryptocurrency that is tied to the price of another currency or asset. By keeping a stable price, it is ideal for those who prefer not to be exposed to the volatility of the rest of the cryptocurrencies. Most commonly, they have a fixed parity with the US dollar, although this is not exclusive and there are different types.
The best known are Tether (USDT), DAI and USD Coin (USDC).
Make it simple