Key Crypto Players

Major Cryptocurrencies

While Bitcoin (BTC) remains the most recognized name in crypto, other assets play important roles in the ecosystem. Here are the major coins you may encounter:

● Bitcoin (BTC): Often referred to as digital gold, Bitcoin is designed as a decentralized store of value. It runs on its own blockchain and is secured through Proof of Work.

● Ethereum (ETH): Ethereum introduced smart contracts, enabling decentralized applications (dApps) such as decentralized exchanges, lending platforms, and NFT marketplaces.

● Solana (SOL): Known for its high-speed transactions and low fees, Solana is a Layer 1 blockchain popular among developers building consumer-focused apps and games.

● Stablecoins (e.g., USDC, USDT): These are pegged to fiat currencies like the U.S. dollar and used to hedge volatility, transfer funds, or participate in decentralized finance (DeFi) activities.

Before investing in any crypto asset, understanding the buy/sell case is key. To evaluate a coin, you can start by learning how to assess its underlying fundamentals and how to apply technical analysis.

Layer 1 vs. Layer 2 Blockchains

Blockchains are often categorized as Layer 1 or Layer 2:

● Layer 1s are base networks like Bitcoin, Ethereum, and Solana. These handle their own security, consensus, and transaction processing.

● Layer 2s are built on top of Layer 1s to improve scalability and reduce costs. They bundle transactions and settle them on the base layer. Examples include:

○ Arbitrum and Optimism: Layer 2s for Ethereum that help scale DeFi apps.

○ Lightning Network: A Layer 2 solution for Bitcoin focused on fast, low-fee payments.

The difference between blockchains can be daunting, so think of it like this: Layer 1 blockchains are like a highway where all the cars (transactions) drive. Bitcoin, Ethereum, and Solana are Layer 1s. But as more cars hit the road, traffic builds up. That’s where Layer 2s come in.

Layer 2s are like express lanes built above the highway. They move traffic more efficiently by bundling up cars and dropping them back onto the main road at fewer exits. This makes transactions faster and cheaper.

Layer 2s are increasingly important as demand grows for faster, cheaper blockchain applications.

Types of Tokens

Tokens can represent many things: a medium of exchange, a governance right, or even a security. The main categories include:

● Utility tokens: These are used within a protocol to access features or pay fees. Example: Ether (ETH) holders can pay gas fees for transactions and smart contract execution on Ethereum.

● Governance tokens: These allow holders to vote on protocol changes or decisions. Example: Uniswap (UNI) holders vote on changes to the Uniswap protocol.

● Security tokens: These represent real-world assets or ownership in a company and are regulated more like traditional securities. They are less common among retail investors due to compliance requirements.

Understanding the function of a token helps determine its risk, utility, and potential for appreciation.

Stablecoins and Their Role

Stablecoins are cryptocurrencies designed to maintain a stable value, usually pegged to a fiat currency like the U.S. dollar.

● Fiat-backed stablecoins: These include USDC (by Circle) and USDT (by Tether), which hold reserves in dollars or equivalents.

● Algorithmic stablecoins: These attempt to maintain their peg using code-based mechanisms rather than collateral. They have a more volatile history and higher risk.

Stablecoins are used for:

● Reducing exposure to volatility

● Transferring money across borders quickly

● Earning yield in DeFi platforms

● Trading without converting to fiat

Despite their utility, stablecoins face increasing regulatory scrutiny and carry counterparty risk.

How Crypto Projects Raise Money

Crypto projects often raise funds differently from traditional startups:

● Initial Coin Offerings (ICOs): Early token sales to the public grew in popularity between 2017–2018. While accessible, many lacked investor protections.

● Token launches and IDOs (Initial DEX Offerings): Token sales hosted on decentralized exchanges, allowing wider participation.

● Airdrops: Projects distribute free tokens to early users as a reward or incentive.

● Venture capital: Institutional investors back crypto startups, often in private rounds before public token launches.

These fundraising methods can impact a token’s supply, value, and long-term performance.

Conclusion

The crypto ecosystem is complex, with different roles played by coins, tokens, and blockchains. Knowing how major cryptocurrencies function, what each type of token represents, and how projects raise capital helps you assess risk and make more informed investment decisions.

Next, we’ll shift focus to protecting your assets and explain how investors can store crypto securely and the tools to use to manage custody.

It would be great to link to Webull's trading page for each one of these coins if possible