Since Bitcoin initiated the crypto era in 2009, the industry has evolved significantly. A16z crypto developed a token classification framework for better navigation in the cryptocurrency landscape.
Cryptocurrency: Definition and Development
Cryptocurrency is a digital currency operating through computer networks without a central authority. While only Bitcoin existed in 2009, there are now over 12 million different tokens, such as memecoins, utility tokens, and more.
Seven Categories of Cryptocurrency Tokens
Miles Jennings, Scott Duke Kominers, and Eddy Lazzarin from a16z crypto created a framework to classify tokens by their use: network tokens, security tokens, company-backed tokens, and more, each serving specific functions, from supporting network operations to representing asset claims.
A16z Crypto's Role in Token Classification
A16z crypto identifies seven main categories of tokens, discussing their roles and regulatory challenges. For instance, memecoins are known for their volatility compared to tokens with distinct practical applications.
A16z crypto's classification helps in understanding the cryptocurrency space and the roles of various tokens. This understanding is essential for smart investing and project development in this field.
