Token Types in Crypto for Best Crypto Investments

A digital artist in Seoul wakes up to find their artwork token sold for $100,000. Meanwhile, a gamer in Brazil makes their monthly income through gaming tokens. This is 2025, where different types of tokens reshape the digital economy.

The token crypto market has grown to $146,834 billion in DeFi tokens alone. These types of tokens in blockchain now span from art to real estate, gaming to artificial intelligence systems.

Top DeFi Tokens by MarketCap

To help you master these types of blockchain step by step, we've created a series of comprehensive guides. For you to navigate, here's the structure:

• Article 1: Blockchain Explained for Dummies: A Really Easy Guide
• Article 2: Evolution and Types of Blockchains Explained
• Article 3: Token Types in Crypto for Best Crypto Investments - you are here
• Article 4: Crypto Protocols Explained: Navigating the DeFi Ocean?

Blockchain Insight Fact: There were only about 100 different token types in 2017. In 2025 we're tracking over 450,000 tokens across various blockchains.

The first recognized ICO and token was Mastercoin, created by J.R. Willet and announced in January 2012 on Bitcoin Forum. His "The Second Bitcoin Whitepaper" described using layers to enhance cryptocurrency functionality. Mastercoin linked its value to Bitcoin and outlined how funds would pay developers to create ways for users to make new coins from their Mastercoins.

Between 2012 and 2016, crypto token creation grew steadily until 2017, when token offerings skyrocketed as investors noticed their potential value increases. Early crypto tokens were simple digital assets. Developers, businesses, and some scammers rapidly created tokens to capitalize on the fundraising boom, prompting regulatory agencies to issue investor risk alerts.

The ICO bubble burst in 2018. Initial exchange offerings (IEOs), in which exchanges facilitate token offerings, appeared shortly after. These exchanges claimed to vet the offerings to reduce investor risks, but scammers still used them to promote schemes. Regulatory agencies warned investors about IEO risks and reminded exchanges they needed to register if facilitating these fundraising efforts, as they might be functioning as alternative trading systems or broker/dealers.

By 2020, the DeFi boom created advanced financial instruments. Then 2022 saw NFTs and metaverse tokens rise. Now in 2025, AI tokens mark another advance in this technology.

Real-World Example: In 2023 Starbucks turned their loyalty program into blockchain tokens. Twenty million customers now trade and earn digital assets with their coffee, most without knowing they use the token economy.

Blockchain creates a space where different types of tokens move as various forms of value. The blockchain ecosystem has developed its own token economy that serves various functions.

Cryptocurrencies like Bitcoin have their own blockchains, are mined or validated, and usually store value or enable payments. Tokens such as USDT, UNI, and LINK use existing blockchains and are generated through smart contracts with multiple use cases.

Real-World Example: Using your concert ticket has value because it represents access to an event, not because of the paper it's printed on. Similarly, token crypto value comes from what it represents or enables, not just its digital form.

Tokens make value through utility by providing access to platforms, payment methods, and governance participation. Binance's BNB token cut trading fees by 25% in 2024, showing practical utility.

Scarcity affects value when tokens have limited numbers and controlled release. The UNI token burned $1.2 billion worth in 2024, reducing supply and potentially increasing value.

Economic benefits come when tokens share revenue, offer staking rewards, or provide market making incentives. Curve's CRV token gave $300 million in fees to holders, demonstrating economic return.

Representation matters when tokens are backed by real assets, grant legal rights, or prove digital ownership. RealT tokens represent $50 million in real estate, connecting digital tokens to physical assets.

Blockchain Insight Fact: Most succesful types of tokens in blockchain mix these value types. UNI tokens give voting rights, fee discounts, and growth potential - keeping a $5 billion market cap during the 2023 downturn.

Smart contracts power all token types. These programs control how tokens are created, shared, and traded. When trading on Uniswap, smart contracts check what you own, set the trade rate, make the swap, and update balances in under 12 seconds. This knowledge applies to all tokens, from AI tokens applications to tokenized real assets.

Think of these as digital cash with advantages over traditional money. These tokens can cross borders in seconds with minimal fees.

Popular payment tokens include USDT (Tether) with $143.95 billion billion market cap, USDC at $60.16 billion, and BUSD with $57.91 million.

Real-World Examples:

1. When Venezuela faced 1,000,000% inflation in 2023, local businesses switched to USDT for stability. Over 65% of all transactions in Caracas now use stablecoin payment tokens.
2. Similarly, in Argentina, facing inflation rates of over 140% in 2023, citizens increasingly turned to stablecoins like USDT and DAI to preserve their purchasing power. Platforms such as Binance P2P reported a surge in demand for stablecoins, with Argentinians using them for day-to-day transactions and as a hedge against currency devaluation.

Utility tokens work like membership cards for crypto platforms and services. They often serve multiple purposes at once:

• Platform access
• Fee payments
• Reward mechanisms
• Service usage rights

Real-World Examples:

Brave browser's BAT token rewards users for viewing ads – distributing over $500 million to 50 million users by 2024. It's like getting paid for the attention you're already giving to advertisements.

Steemit, a blockchain-based social media platform, rewards content creators and curators with its native token, STEEM. By 2024, the platform had distributed over $300 million in rewards to millions of users worldwide, encouraging high-quality content creation and community engagement. It's like getting paid for blogging or sharing your opinions online.

Sweatcoin, a move-to-earn platform, rewards users with its token SWEAT for physical activity like walking or jogging. By 2024, it had rewarded users with over $200 million worth of tokens, which can be redeemed for goods, services, or even converted into cryptocurrencies. It's like getting paid for staying healthy.

Security tokens put traditional financial assets into digital form. They represent ownership in real-world assets from stocks to real estate:

• Regulated securities
• Real estate shares
• Company equity
• Commodity certificates

Real-World Example: The tZERO platform offers security tokens representing company ownership that comply with regulations and are available to accredited investors. Token holders earn company revenue percentages, enjoy regulatory protection, and can trade their securities on approved markets with stock-like liquidity.

In 2018, tZERO raised $134 million through its security token offering, showing how blockchain can transform capital markets while following regulatory standards.

Governance tokens bring democracy to digital finance by giving holders voting rights in protocol decisions:

• Protocol upgrades
• Treasury management
• Risk parameters
• Strategic decisions

Blockchain Insight Fact: In 2024, MakerDAO's governance token (MKR) holders managed over $7 billion in assets, similar to traditional investment funds. Governance tokens are central to blockchain systems like Cosmos (ATOM) and protocols such as Uniswap (UNI) and Aave (AAVE), allowing communities to vote on upgrades, fund allocation, and protocol changes.

NFTs are unique digital tokens that revolutionize ownership concepts. Each one is distinct, like a digital fingerprint.

NFTs transform digital art ownership by letting artists sell directly to global audiences without middlemen, keep royalties on resales, and guarantee authenticity. Platforms like OpenSea and Foundation have helped creators earn millions.

In gaming, NFTs let players truly own items like weapons or characters, allowing trade and use across different games. This breaks the traditional approach of gaming companies controlling all assets.

Virtual real estate platforms like Decentraland and The Sandbox let users buy, sell, and develop virtual land with NFT ownership, enabling real-world activities like renting and advertising in digital spaces.

NFTs also show promise for identity verification, with universities potentially issuing tamper-proof diplomas and digital passports streamlining identity checks across borders.

Modern token types blur these categories. AAVE tokens provide governance rights, platform utility, staking rewards, and market-making incentives all in one. This natural evolution creates more powerful and flexible digital assets.

Crypto tokens operate through blockchain technology. Instead of purchasing a tangible item, you are purchasing ownership rights that are documented on a distributed ledger when you purchase a token.

Smart contracts create and govern tokens. These specialized programs specify token functions, distribution strategies, and supply limits. Your private key authorizes transfers by signing transactions. After verifying this signature, the network updates ownership information.

Consensus mechanisms allow computers across the network to agree on transaction validity without central oversight. This prevents double-spending and fraud.

Tokens come in two varieties: fungible (identical and interchangeable units like USDT) and non-fungible (unique with distinct properties like NFTs).

Want to Know More About USDT?

USDT - One of The Most Important Crypto Assets

Smart decisions with crypto tokens start with security. In 2023 alone, security incidents cost the cryptocurrency industry $2 billion. Most shocking? Basic safety measures may have avoided about 90% of these losses.

Even big names can fall victim. Look at what happened with Curve in 2023 - a single DNS compromise led to $73 million in losses. This shows no project is too established to fail.

The foundation of token safety lies in smart contract security. Numbers tell the story clearly: tokens that underwent multiple security audits experienced 85% fewer security incidents in 2024 compared to non-audited ones.

Start your token assessment by looking at the team. Transparency and prompt problem-solving are important. Solana showed how it should be done in 2024 when their team fixed a network bug within hours of discovery.

Next, look closely at token economics. Concentrated token supply is a noticeable red sign among failed initiatives. 80% of projects that collapsed in 2024 had over half their tokens controlled by fewer than 10 addresses.

Consider what happened with SafeMoon. Despite having a market cap of over $6 billion in 2021, this token raised major concern because of its incredibly low daily trading volume in relation to its market value. Many analysts flagged this as potential market manipulation.

The Terra (LUNA) collapse offers another painful lesson. Their algorithmic stablecoin UST promised unsustainable 20% returns through the Anchor Protocol. Poor decentralization and liquidity issues led to a catastrophic outcome - over $40 billion vanished in less than a week. This reminds us to be cautious of ventures that promise exceptionally high payouts without strong backing.

Common characteristics of successful tokens include transparent token distribution, active development communities, frequent security audits, and consistent user growth. They communicate clearly with their community and demonstrate ongoing development through consistent GitHub activity rather than just marketing hype.

Stay safe by spreading your investments across different token types and risk levels.

Example: A balanced portfolio in 2024 might include:

• L1 projects (65%)
• DeFi projects (15%)
• Infrastructure projects (10%)
• AI projects (10%)

A Balanced Crypto Portfolio

Real-World Example: On June 22, 2024, BtcTurk, Turkey's largest cryptocurrency exchange, experienced a security breach. Hackers exploited vulnerabilities in the exchange's hot wallets, stealing approximately $55 million in various cryptocurrencies. Fortunately, most of BtcTurk's assets were secured in cold wallets, and users with hardware wallets didn't lose any funds.

Store your tokens in hardware wallets when possible. Keep your security software updated and stay alert to phishing attempts. Watch project developments, community discussions, and expert analyses to spot warning signs early.

One obvious conclusion from exploration of the different types of token - we are only beginning to see the full potential of this technology.

Combining AI with tokens creates new possibilities for digital assets. AI tokens crypto add smart portfolio management and data analysis to blockchain. These systems track market patterns, update investment plans, and boost profits faster than human traders can.

Real-World Asset tokens connect physical items with digital ownership. A French vineyard showcased this by tokenizing its 2024 wine collection. They created 500,000 tokens, each representing one bottle of high-quality wine. These tokens were bought by investors and wine lovers all across the world, giving them ownership in the luxury wine industry without regard to location.

liv-ex.com - global exchange of wine trade

Environmental tokens grew 300% in 2024, with $2 billion now locked in climate projects. This invention uses blockchain technology to demonstrate an increasing dedication to environmental sustainability.

Traditional finance giants like JPMorgan have tokenized $1 billion in money market funds through their Onyx blockchain platform. This move cut settlement times from days to minutes and reduced costs by 90%, showing how established institutions now embrace the technology.

The EU's Markets in Crypto-Assets regulation, which took full effect in December 2024, establishes a comprehensive legal framework for crypto assets. This could set global standards for the issue of tokens and associated services. Technological developments in zero-knowledge proofs improve blockchain security and privacy while allaying worries about the dangers posed by quantum computing.

Universities now explore issuing academic credentials as NFTs. This provides secure, verifiable digital diplomas that streamline verification processes and reduce fraud.

Stablecoin transaction volumes have surged, with monthly transactions exceeding $700 billion. According to projections, token transaction volumes might eventually approach $1 trillion per day, matching those of traditional stock exchanges. This highlights the massive shift underway in how we exchange value.

Tokens will change the way information and money move across our society. They will blend inconspicuously with every facet of our digital lives, becoming as ubiquitous as cellphones.