Bitcoin

This was the first cryptocurrency that really grabbed people’s attention and, no wonder, since at one stage it rose in value from a few cents to each Bitcoin being valued at over $64,000! Bitcoin has dominated not only media attention but also, with a market capitalisation of $800,000, it accounts for approximately 40% of the crypto market value. Ever since its adoption in 2008, Bitcoin has seen numerous ups and downs but its adoption continues to grow, with countries now accepting Bitcoin as legal tender.

Source: David Shares on Unsplash

Altcoins (alternative coins)

The success of Bitcoin prompted many other blockchain enthusiasts to create their own cryptocurrencies, all in a bid to gain control of parts of the growing crypto market. The cryptocurrencies created were alternatives to Bitcoin. Although they shared certain features with Bitcoin, they were still all different in varying ways. Some altcoins differentiate themselves from Bitcoin by offering new features such as reduced volatility or smart contracts. Others distinguish themselves by adopting a dissimilar consensus mechanism to authenticate transactions and produce blocks. As of March 2022, there were over 18,000 cryptocurrencies (Bitcoin and Ethereum being responsible for almost 60% of the market), with altcoins accounting for the remaining percentage. As it stands, the growth of most altcoins is tied to Bitcoin. With time and development in the cryptocurrency network, the expansion of altcoins will soon be independent of Bitcoin - after all, every other coin aside from Bitcoin is an altcoin. Some examples of altcoins are Solana, Binance Coin, Ether, Dogecoin, Filecoin, Shiba Inu and Wakanda Inu. However, for now, there does appear to be a degree of systemic risk in the sense that much of the crypto market follows the rise and fall of Bitcoin’s price.

Stablecoins

Stablecoins are a class of cryptocurrencies that have attempted to solve the price volatility problems of Bitcoin and other cryptocurrencies which use different types of assets to peg/link their value. There are four types of stablecoins:

• fiat-backed

• crypto-backed

• commodity-backed

• algorithmic 

Stablecoins have enjoyed support and adoption, even with those organisations and people who have taunted Bitcoin as being problematic. Stablecoins serve as the bridge between fiat currencies and cryptocurrencies. They can offer the instant processing, privacy and security characteristics of cryptocurrencies as well as the stable nature of fiat currencies. Fiat-collateralised stablecoins are coins that are pegged to fiat currencies such as the US$, £, Yen etc. The biggest fiat-backed stablecoin is USDC with Grant Thornton carrying out a monthly attestation to confirm that the tokens are backed by the equivalent number of US$.

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However, the biggest stablecoin in terms of value, Tether (USDT), is not 100% backed by US$. Crypto-collateralised stablecoins are coins that use other cryptocurrencies as collateral such as Dai. MakerDAO created the Dai which uses smart contracts and runs on the Ethereum blockchain and is designed to track the value of US$. Commodity-backed stablecoins are pegged to gold, silver, nickel etc which use these commodities as collateral to back these cryptocurrencies. An example is the Nire token, backed by nickel wire known as Nichrome which is a Nickel alloy. Safi Qurashi founder of Nire tech when asked do we need the Nire token: “The Nire tokens offer one the ability to have easy a low cost and simple exposure nickel which is a key commodity used in gas turbine blades, rocket engines, electric car batteries and many different alloys that we are increasingly using as a society. The Nire token is 100% backed by physical Nicrom held in a secure storage facility in Germany.” 

Algorithmic stablecoins (sometimes referred to as non-collateralised stablecoins) are designed to create a token whose value is typically linked to a fiat currency e.g., US$. They are designed to be truly decentralised and rely on smart contracts. They can be seen as similar to the way many central banks operate - increasing (minting) the number of stablecoins when the price rises and reducing (burning) the number of stablecoins when the price goes down.

Shitcoins

Shitcoins are cryptocurrencies with little or non-existent value. They usually occur, or increase, as a result of the influence of popular individuals or groups e.g. Dogecoin (which has seen a 150% increase in its price in the last few days) and Shiba Inu to Elon Musk and Wakanda Inu to a group of top leading cryptocurrency experts in countries in Africa. This coin type mostly enjoys a short term run and increase due to the clout and hype built around it on online spaces. Coins such as the Wakanda Inu are a passion project, hence the benefits and rise they enjoy. Most cryptocurrencies become shitcoins when they have little applied use, because the use of cryptos by the general public has not yet happened.

Metacoins

Metacoins are those cryptocurrencies being implemented across the metaverse. Metacoins are slowly beginning to increase in value because they are being adopted as means of exchange in the metaverse. Examples of Metacoins are Metahero, Alice, MANA, SAND and DOME.

Utility Tokens

Utility tokens, whilst not a coin type, per se, fall into the definition of a cryptocurrency. A utility token is used to pay for services in a network. Utility tokens do not pay out bonuses or rights such as votes, unlike security tokens.

Security Tokens

Security tokens are pegged to assets such as equities, debt instruments, real estate, mutual funds, derivatives etc. They are comparable to traditional securities, giving their owners the same rights as if they held the physical security. Arguably, security tokens (or as some call them, digital assets) could well become the largest type of cryptocurrency as institutions wrap existing assets they own and trade into digital assets.

Some of the initial ways that the metaverse is being proposed to have an impact include:

• on-line games

• real estate

• social interaction/ experiences

Meta’s metaverse

Source: Meta

The origins of the concept of the metaverse date back to the early 21st century whereby using virtual reality headsets and interacting in an almost ‘video game-like digital world’ was the theory of the metaverse first introduced by Neal Stephenson in his 1992 novel, “Snow Crash”. As this demonstrates, it is not a newly invented notion - it has been around for a while and is most certainly still evolving. Until recently, in October 2021, the CEO of Facebook, Mark Zuckerberg, announced Facebook was to change its name to Meta. It is not only Facebook that believes the metaverse is here to stay. Microsoft has recently announced the largest acquisition it has ever made to acquire Blizzard Activision (paying a massive $68.7billion), and is looking to integrate its Teams platform into Meta’s Workplace platform.

One of the benefits which metaverse has the potential to address is that of remote work environments. According to Akash Takyar, CEO of Leeway Hertz, (which has helped build over 100 tech platforms for a variety of companies), the metaverse can help “the employer to resolve problems like productivity time theft and goldbrick at the workplace by keeping track of team productivity through their unique avatars”. Working remotely has been forced onto many due to COVID-19, and it has had its drawbacks - probably the most identifiable is that of being distracted and not working when you are expected to. To assist with this issue, the metaverse enables managers to effectively communicate with their employees, including reading body language and in-person interaction. Essentially, by more interactive monitoring this will hopefully encourage employees to be more productive, even at home, and offer a more engaging experience in which to communicate. Furthermore, metaverse allows organisations to create a virtual office and/or classrooms at home. Globally, the COVID-19 pandemic has resulted in a heavy toll on all levels of the education sector. School and university students have been required to learn remotely, undoubtedly producing many challenges. Whilst platforms such as Zoom allow students to interact with teachers, professors and each other, there remains the physical barrier that cannot be overcome with such technologies. The metaverse aims to provide a ‘joined-up’ online experience in which a single avatar can move between spaces - such as from a lecture hall to a science laboratory. Since there is complete control over what students see inside the metaverse, visual learning makes it easier to communicate ideas and concepts.

Another exciting use for the metaverse is that it offers organisations the facility to carry out market research whilst giving consumers the ability to use digital products and services before they purchase physical ones. This experience allows the users to gain first-hand experiences about the feel of the products and how they will bring value into their lives. Every retail vendor will have the ability to engage with audiences all around the world and will be able to present their products without any restrictions. This concept has not been lost on global brands such as Adidas and Nike as they begin to unveil their initial forays into NFTs and the metaverse. Meanwhile, journeys to other planets or to other countries, or even visiting an underwater city, is possible in a metaverse. Although worldwide travelling is adventurous, not everyone can experience this and with the geopolitical uncertainty and higher airline tickets prices there could, indeed, be greater interest in what the metaverse offers to intrepid globetrotters through virtual travel. As the publication, Luxury Travel Magazine reports, travel “is already beginning to embrace the metaverse exploring new forms of marketing and new ways to offer better experiences, and travelers are beginning to reap the benefits”. By using the combined power of metaverse, AR and VR, an advanced virtual world is being developed which offers a 'first-person' experience to the users with a much-desired smaller carbon footprint and, equally importantly, is available for those both with or without a disability. The size of the metaverse market is undoubtedly predicted to grow with this technology, attracting social networks, online game makers and other technology leaders. It has been suggested that the global metaverse revenue opportunity could approach $800 billion in 2024 - a huge rise from the $500 billion in 2020 - representing a compound annual growth rate of 131.1%.

Metaverse market growth outlook

Source: Bloomberg