Types of Cryptocurrency in Vietnam
Currently, cryptocurrencies are generally divided into three main types with different usage methods as follows:
Fiat Digital Currency
This is a type of cryptocurrency that has been recognized by the government. It is one of the three very popular types of cryptocurrency today and is stored directly in ATM cards, bank accounts, e-wallets, etc. Owners can also use this fiat digital currency to exchange for traditional paper money.
Virtual Money
Virtual money is a type of currency issued and managed by organizations, companies, and businesses. However, virtual money is often not recognized by the government. It is commonly used in forms such as in-game currencies for buying, selling, or exchanging game items, coin transactions, or transactions on e-commerce sites that accept virtual money.
Cryptocurrency
This is a branch of virtual money, exemplified by the famous Bitcoin. Cryptocurrency is based on blockchain technology, so it is not influenced by the government. Since it always operates in an anonymous manner, its security is also extremely high without the need for a third-party intermediary.
The operating method of cryptocurrencies
Most cryptocurrencies today operate on the Blockchain technology platform. This method of operation provides secure and convenient transactions. Each cryptocurrency is understood as a file stored in a digital wallet. Users can access their wallets using smartphones or devices that support internet connectivity. These stored files are transferred from one person to another through Blockchain technology.
Blockchain, or chain of blocks, is currently a popular encryption technology platform that helps users complete transactions securely. When users transfer cryptocurrency, this Blockchain system records it in a virtual public ledger. This is similar to adding small blocks to a chain of activities. Each block is considered a record of a specific transaction. Adding blocks to this transaction chain makes counterfeiting cryptocurrency more difficult than ever.
Cryptocurrencies are often not created by governments or financial institutions like the USD, nor are they as readily available as gold. Cryptocurrencies are developed and operated based on mathematical foundations. They apply a distributed network for transaction systems. This means that transactions are executed through banks without the need for protection from a third party. Mathematical equations are often used to link accounts with the actual money that owners spend.
When participating in cryptocurrency transactions, you need to log in with an email and an anonymous identity. Cryptocurrency exchanges do not require you to provide your real name or register with any bank. You can completely create cryptocurrency units through the process of mining coins, which is essentially hunting for cryptocurrencies using computer devices.
Introduction
Cryptocurrency has revolutionized financial systems worldwide. Understanding how digital assets are grouped is essential for anyone interested in blockchain, trading, or investment. This guide delves into the taxonomy of cryptocurrencies, exploring their classified currencies and explaining key distinctions and categories.
Digital assets began with Bitcoin in 2009. Today, thousands of projects exist, offering varied features. Analysts and regulators sort these assets into distinct groups based on function, risk, technology, and purpose. These classified currencies help investors assess potential, sustainability, and regulatory compliance.
1. Payment Tokens
The most intuitive category, payment tokens, are designed for transactions. Bitcoin, Litecoin, and Bitcoin Cash fall into this group. They aim to serve as peer‑to‑peer money, challenging conventional banking. These classified currencies are evaluated by transfer speed, transaction fees, and decentralization.
2. Utility Tokens
These provide access to a platform or service. Examples include Ethereum’s ETH (used to pay for gas) and Filecoin’s FIL. Utility tokens rely on a specific project’s ecosystem functioning. As classified currencies, they are measured by network adoption and real‑world usage.
3. Security Tokens
These tokens resemble traditional securities such as stocks or bonds and are often regulated. They represent equity, dividends, or revenue shares. Security tokens like tZERO or SPiCE VC must comply with securities laws. Within classified currencies, this category draws investor scrutiny and legal clarity.
4. Governance Tokens
These tokens grant holders rights to vote on protocol changes. Projects like MakerDAO (MKR) and Compound (COMP) distribute governance tokens to decentralize decision-making. Under classified currencies, governance tokens reflect decentralized governance and community control.
5. Stablecoins
Stablecoins provide price stability by anchoring to fiat currencies or commodities, often used for trading or remittance. USDC, USDT, and DAI exemplify this class. These fall under classified currencies, valued for minimizing volatility and enabling liquidity.
6. Non‑Fungible Tokens (NFTs)
NFTs are unique tokens that represent collectibles, digital art, or virtual real estate. They are not interchangeable, unlike fungible tokens like Bitcoin. Projects like CryptoPunks and Bored Ape Yacht Club illustrate this trend. They expand classified currencies discourse into digital ownership and creative markets.
7. Asset‑Backed Tokens
These tokens are backed by real-world assets such as gold, real estate, or commodities. Examples include Digix Gold (DGX) which is anchored to physical gold. Under the rubric of classified currencies, asset-backed tokens merge blockchain with tangible investments.
8. Platform Tokens
Platform tokens power entire blockchain ecosystems. Ethereum’s ETH, Binance Smart Chain’s BNB, Solana’s SOL, and Polkadot’s DOT fall here. They support smart contracts, dApps, and DeFi. They are essential in classified currencies frameworks, reflecting ecosystem strength and development activity.
9. Privacy Coins
Privacy-focused coins ensure transaction obfuscation. Examples include Monero (XMR), Zcash (ZEC), and Dash. They prioritize anonymity over traceability. Within classified currencies, privacy coins introduce important discussions around compliance and individual rights to financial privacy.
10. Meme Coins & Community Tokens
Often born from internet culture, these projects thrive on community hype. Dogecoin (DOGE), Shiba Inu (SHIB), and Safemoon are prominent. They are frequently speculative, relying on social momentum rather than utility. Despite risks, they are still classified currencies, underscoring community-driven dynamics and viral economics.
11. Hybrid Tokens
Some tokens blend roles—offering governance, staking rewards, and utility. Examples include Tezos (XTZ) or Avalanche (AVAX), which offer multiple functionalities within a single token. These hybrid tokens fit into classified currencies, highlighting that boundaries are often fluid in the blockchain domain.
12. Interoperability Tokens
These tokens aim to connect distinct blockchains. Chainlink’s LINK provides decentralized oracles for data input. Polkadot’s DOT and Cosmos’ ATOM enable cross‑chain messaging. They play a unique role among classified currencies, building bridges across disparate ecosystems.
Classification Criteria
To sort crypto assets, analysts use several criteria:
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Functionality & Utility – Does the token serve a utility, function as payment, or represent an asset? This affects its place among classified currencies.
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Technological Layer – Is it a base-layer token (e.g., Ethereum) or a second-layer solution (e.g., Polygon)? Layer classification informs performance and scalability within classified currencies taxonomy.
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Regulatory Treatment – Is it regulated as a security, commodity, or commodity derivative? Regulation shapes how tokens are considered classified currencies.
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Governance Model – Centralized vs decentralized control impacts classification within classified currencies, especially for tokens with voting rights.
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Tokenomics & Economics – Total supply, inflation rate, staking mechanisms, and burn policies influence value. These economic features are key for classified currencies analysis.
Real‑World Use Cases & Examples
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Remittances: Payment tokens like XRP and Stellar’s XLM are used to send money across borders. These classified currencies are valued for low cost and speed.
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DeFi & Lending: Governance tokens such as AAVE and COMP power decentralized finance protocols. These classified currencies bring disruption to traditional banking.
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Digital Art & Ownership: NFTs like ENS domains and virtual land in Decentraland have real-world monetary implications. They broaden classified currencies into digital property.
- Currency is a legal means of payment used for the exchange of goods and services within a region, country, or economy.
Risks Across Categories
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Volatility: Payment, meme, and utility tokens often experience sharp price swings. These types of classified currencies carry high risk.
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Regulatory Uncertainty: Security tokens face strict rules. Stablecoins may be scrutinized for reserve backing. Regulatory risks define how some classified currencies are treated legally.
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Hacks & Smart‑Contract Bugs: Utility tokens and NFTs tied to platforms face code vulnerabilities. Within classified currencies, protocol security is crucial.
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Market Speculation: Meme coins often rely on hype. Their inclusion in classified currencies highlights speculative bubbles.
Evaluation & Due Diligence
When assessing any cryptocurrency, investors should:
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Check whitepapers and token specs to understand purpose and category. That helps sort one’s assets within classified currencies.
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Monitor on‑chain metrics – active addresses, transaction volume, staking rates. These metrics show adoption among classified currencies.
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Investigate development activity on GitHub or community forums. Active ecosystems indicate healthier classified currencies.
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Stay updated on regulatory news. Token classifications change with new laws, affecting which classified currencies are categorized as securities.
Taxonomy Models
Several institutions attempt to formalize crypto classification:
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IOSCO considers whether tokens fall under securities laws.
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MiCA (EU) defines asset classes like e-money tokens (stablecoins), asset‑referenced tokens, and utility tokens.
These frameworks shape how classified currencies are regulated and accepted globally.
Future Trends
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Central Bank Digital Currencies (CBDCs) – State‑issued digital money backed by central banks. These will become their own category, separate from private classified currencies.
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Tokenization of Real‑World Assets – Expect more tokens representing real estate, art, commodities—expanding classified currencies into new domains.
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Regulation & Standards – As governments formalize definitions, more rigorous subcategories within classified currencies will emerge (e.g., “regulated payment token” or “retail‑resistant governance token”).
Conclusion
Understanding how cryptocurrencies are categorized is key to navigating the space. From payment, utility, security, governance, stablecoins, NFTs, and beyond, classified currencies offer insight into use cases, risk, and growth. Proper classification aids investors, builders, and regulators in making informed decisions.
Glossary of Key Terms
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Fungible – Tokens that are interchangeable (e.g., BTC, ETH).
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Non‑fungible – Unique tokens (e.g., NFTs).
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Tokenomics – Economic model behind a crypto token.
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Smart Contract – Self‑executing code on a blockchain.
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DAO – Decentralized Autonomous Organization.
These terms help clarify discussions on classified currencies.
By recognizing categories and classification criteria—utility, payment, security, governance, stability, privacy, and more—stakeholders can better navigate the evolving world of cryptocurrency. Classified currencies are more than labels; they serve as a roadmap for analysis, investment, regulation, and innovation.
