4. Breaking Down The Crypto Sectors
Taking advantage of everything in front of you
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This weeks letter will be a bit different than my normal ones, pretty detailed but not over boring. “In my opinion” there is an underdiscussed issue in the crypto space that if not brought up could hurt us more than help us.
The word cryptocurrency and its meaning.
For many people entering the space it means Bitcoin, Doge, and NFT’s. The WAGMI dream of pumping each others bags, buying lambos and photos of apes to flex. While this is the standard dream most don’t achieve it, even worse most don’t understand it. I could gloat on Bitcoin and NFT’s all day, the issue is that’s just the tip of the iceberg, so many projects with real use benefits that most in the space don’t even take advantage of. There are over 140 categories for crypto on coinmarketcap.com, luckily many of those categories can be broken down into sectors. Crypto as a whole looks much more like this right now:
Like I said the tip of the iceberg, but like the stock market has different categories this letter will cover the crypto categories. I would like to point out these categories are to the best of my knowledge and with how fast his space moves there may be mistakes and companies or projects could shift focus over time. Also, I will always stress the importance of doing your own research no matter where your source of information comes from. There are many “gurus” providing misinformation for money and many scammers just waiting to catch your mistake. With that being said, lets get to it…
Understanding a Token vs Coin
The first thing to understand with cryptocurrency is you have coins and tokens. It really doesn’t matter as people get them mixed up all the time then just refer all as crypto, but understanding is half the battle.
What is a coin?
A coin is any asset that is native to its own blockchain. It has its own blockchain and runs off that, 3 examples:
Bitcoin - Bitcoin Blockchain
Ethereum - Ethereum Blockchain
Litecoin - Litecoin Blockchain
Typically you would use these coins just like you would use currency today, but some have more value behind the scenes. Coins like Bitcoin, Monero, and Litecoin are perfect for purchases. A coin like Ethereum has more value than just purchases, it fuels the ETH network including mining cost, transaction fees, etc. When you trade or exchange a coin it doesn’t physically go anywhere, the account balances are just both updated while the currency stays in the same place like your bank.
What is a Token?
Tokens are built on top of existing blockchains thank to the creation of smart contracts. Just some code that helps with trades or payments since each blockchain uses its smart contract, Ethereum uses an ERC-20 standard. Tokens when spent actually move from one place to another, like my wallet to your wallet. The reason is a token involves actual change of ownership like changing names on a title or deed, examples:
Non-Fungible Tokens (NFTs) - Tokenized items such as music, art, etc.
MakerDao (MKR) - A governance token
Auger (REP) - An event predication market
Wrap up
Coins are mainly used for payment while some like ETH can have characteristics of more than just payment, they also have there own unique blockchain. Tokens are built on top of coins using smart contracts to benefit from that projects blockchain ecosystem. Most people call them both cryptocurrencies and while what you call it doesn’t matter, understanding there is a difference does.
Payments
These are cryptocurrencies that are meant to be used as everyday financial transactions. While every crypto be it token or coin can be used as that today the ones in this sector are specifically meant for transacting and every day purchases. 3 examples below:
Bitcoin (BTC)
Litecoin (LTC)
Doge (DOGE)
Privacy
Think of these crypto like the payment ones above, just more focused on privacy of the currency. Leaving out transaction details like names, how much, any history, the goal for these guys is 100% privacy. With no data being collected like traditional payment systems there would be no room for hackers or scammers to collect any data. Full control of your money, here’s 3 examples:
Monero (XMR)
Z Cash (ZEC)
Horizen (ZEN)
Stablecoins
These are cryptocurrencies designed to be pegged to another crypto, currency or asset class and mimicking that assets price, in the U.S. a stablecoin mimics the U.S. dollar. Many corporations and institutions today are changing real dollars for digital crypto dollars to benefit higher APY, lower fees and exponential growth. 3 examples below:
Tether (USDT)
USD Coin (USDC)
Binance USD (BUSD)
Centralized Exchange
These are tokens that represent real life companies like a stock accept they facilitate the buying, selling, and trading of cryptocurrencies. There are global centralized exchanges such as Webull and Robinhood, but strictly speaking crypto here’s 3 examples:
Crypto.com (CRO)
Binance Coin (BNB)
FTX Token (FTT)
Decentralized Exchange (DEX)
These are exchanges that have cut out the middle man so there is no sign up process. Just a peer-to-peer payment system from me to you, not from me to third party to you. This means more security, faster transaction speeds and lower transaction cost. 3 examples:
Uniswap (UNI)
Stellar (XLM)
Loopring (LRC)
Decentralized Finance (DeFi)
This category is any financial crypto that runs through peer-to-peer public blockchain systems. There are no third parties for businesses or services using this model, DEXs like the category above all fall in the DeFi category. 3 examples found throughout letter:
Uniswap (UNI)
Tezos (XTZ)
Chainlink (LINK)
Smart Contracts / Platforms
At there core these are internet protocols that help verify, govern and facilitate a negotiated contract without a third p arty. You can use smart contracts in banking, healthcare, insurance, the list goes on since we have no idea what these are capable of yet. As stated throughout the letter decentralization creates a faster, more secure, and free world economy. These can be dApps, DEXs, DAO, and more as the future unfolds, this sector is very important for the global economy “in my opinion” so ill be listing a few examples:
Ethereum (ETH)
Cardano (ADA)
Chainlink (LINK)
Binance Coin (BNB)
Algorand (ALGO)
Vechain (VET)
Tezos (XTZ)
NFT/Gaming
This is right now the most important sector I think as we keep seeing NFTs will be the reason so many people enter the crypto space. From here branch off to understand more about crypto as a whole, but NFTs are just data stored on the blockchain. That data could be a music file, a photo, video but giving it a 1 /1 code making it unique not interchangeable, but still tradeable. Some NFTs bring real world utility such as play -to-earn video games, building communities, etc. 3 examples:
Decentraland (MANA)
Enjin (ENJ)
The Sandbox (SAND)
Take advantage of what’s in front of you
Remember that iceberg?
Good, because were probably about here after everything I touched on.
We’ll call it 20-25% meaning this is only a handful of the different cryptocurrency sectors. They all have value and benefit the space in their own ways. Some may not be as sexy and popular as NFTs right now but that doesn’t mean they should be overlooked. Anything you are passionate about you can most likely find a sector for it, even day to day activities you can be rewarded for like never before. Here are some real life use case cryptos that I have been benefiting from over a year now:
Probably my favorite use case Token/Business is Crypto.com. A centralized crypto exchange where you can buy, sell, and trade crypto with a twist. There also a bank with a crypto based visa debit card, by swiping my crypto.com card for everyday purchases I earn crypto (CRO) token. Bills, gas, food, you name it I get paid in crypto for it, not only that they offer staking rewards such as reimbursed: Netflix, Spotify, amazon prime, etc. Staking can be done on almost any cryptocurrency wallet or exchange, different cryptos supported on each one.
Brave Browser (BAT) - The only browser I ever use now, a browser just like chrome, internet explore, or dare I say Firefox. So why Brave? Mainly because for using this browser I also get paid in crypto to use it (BAT) tokens. Also, they block more adds which speeds up my internet and don’t collect as much data which means more privacy.
Presearch (PRE) - A search engine like google. No, better than google! For starters yes I get paid in crypto (PRE) tokens for searching up stuff like I normally would at anytime. You know, the clueless basic questions:
How many cups of water with rice?
What does WAGMI mean?
Does substack have a dark mode?
More privacy, data that does get sold or shared with other third party companies. Being decentralized also helps offering more choice and control, but allowing to be censorship resistant.
Lost Relics - A blockchain based video game, a new way of playing called “play-to-earn”. Most video games these days you have to buy costumes, weapons and items with no benefit other than using it in the game. Play-to-earn games introduce NFTs where not only can you buy an item and use it in game, you can take that same item and re-sell it back on the marketplace. Best part is the actual play to earn part where you play the game find items in it which could contain real world blockchain value. From there you could sell it or keep it and let it gain value, a truly unique concept that will reshape the gaming world.
Decentraland - Another blockchain based video game only this one is not play to earn, its in the metaverse. I speak a lot about the metaverse on my second newsletter, just click here to check it out. I have no financial benefit from this game, but I have met so many cool people. Very open minded creative people all just kicking it in this virtual world, I love this community. My value from this game is the relationships I can build there, check me out in Decentraland we can link up and have fun.
I still have so much to learn and maybe some of you reading have been in the space longer and know more than I do, in which case lets connect. I just wanted to shed light on the issue at hand which is many people have not taken advantage of these sectors. Bitcoin is king and NFTs are transformational, but helping others actually understanding this technology creates a safe space in the crypto environment. We can all flourish if we spread love and knowledge, I found this beautiful quote by Jonathan Raymond:
“You can't know what you don't know. You can't know about things you have yet to discover.”
So I leave you with this in hopes you discover the rest of the iceberg, I may see you along the journey.
Thinking about adding projects for the week I have my eye on? Be in NFT or crypto projects. Comment below or shoot me a message on twitter if that’s something you would like. @MilanoKahlil
Disclaimer: I’m not a financial adviser. These are my own opinions, thoughts, and ideas .This newsletter is not investment advice. Always consult a professional/licensed financial adviser before trading or investing in any cryptocurrency related product.