How many types of cryptocurrencies are there? The complete analysis of the most profitable investment sectors in the crypto world in 2024

How Many Types of Cryptocurrencies Are There? Why Do Investors Need to Distinguish Between Sectors?

As the blockchain ecosystem matures gradually, the variety of cryptocurrencies has far exceeded initial expectations. There are thousands of cryptocurrencies in circulation, but not all are worth attention. Understanding the classification system of cryptocurrencies is crucial for investment decisions—just as stock investors need to differentiate between tech, financial, and traditional sectors, crypto investors also need to grasp the characteristics of different tracks.

Based on application areas and technical features, cryptocurrencies can roughly be divided into mainstream assets (such as BTC, ETH) and several emerging sectors, including meme coins, real-world asset tokenization, artificial intelligence applications, decentralized physical infrastructure, on-chain gaming, instant messaging ecosystems, public chain ecosystems, and decentralized finance (DeFi).

Each sector has different cycles of rise and fall, and the driving forces vary. This is why professional investors switch investment focus flexibly according to market cycles rather than sticking rigidly to a single coin.

What Is the Most Profitable Cryptocurrency Sector in the First Half of 2024?

According to market statistics, meme coins performed astonishingly in the first half of 2024, becoming the most lucrative investment area of the year. In this sector, the average return rate for investors reached an incredible 2405.1%, far surpassing the performance of any other sector.

Specifically, meme coins’ profitability is 8.6 times that of the second-ranked real-world asset tokenization (RWA) sector and 542.5 times that of the lowest-yielding DeFi sector. Such multiples vividly illustrate the high-profit nature of the meme coin market.

Among the top 10 meme coins by market cap, projects like PEPE, Dogwifhat, FLOKI, and BRETT performed outstandingly, sparking a new wave of meme coin enthusiasm. Especially under the global popularity of “Black Myth: Wukong,” the related meme coin $WuKong issued on the Solana blockchain surged over 99,999% within 24 hours. Sharp investors made profits of $350,000 in just five hours.

The core reason meme coins attract so many investors lies in their extreme volatility and cultural phenomena. However, investors should also recognize that these assets carry very high risks and are not suitable for everyone.

In-Depth Analysis of the 9 Main Cryptocurrency Sectors

1. Meme Coins (Memes)—Cultural Phenomenon-Driven Investment Miracles

The concept of memes originated from biologist Richard Dawkins in the 1970s, used to explain how ideas and cultural phenomena spread like viruses. In the crypto space, meme coins refer to those that go viral due to cultural resonance and surge because of community effects.

The most iconic example is Dogecoin (DOGE). It was initially created as a satire of the crypto bubble, but with support from public figures like Elon Musk and enthusiastic community backing, it became the world’s most famous meme coin. Shiba Inu (SHIB) follows a similar propagation logic.

These currencies are characterized by high volatility, short investment cycles, and are unsuitable for large allocations. But precisely because of these traits, they become a paradise for short-term speculators—small investments can generate astonishing returns.

In the first half of 2024, the top 10 meme coins achieved an average return of 2405%, far exceeding other tracks. Currently, DOGE remains the most liquid meme coin.

Total market cap of projects in this sector: $44 billion

2. Real-World Asset Tokenization (RWA)—Bridging Traditional Finance and Blockchain

There are many assets in real life that are difficult to transfer or sell. For example, in Taiwan, many land parcels are fragmented due to multiple generations inheriting property, involving too many parties to facilitate transactions. Similar issues exist with other asset types—precious antiques, vintage wines, real estate—all hindered by poor liquidity.

The solution offered by real-world asset tokenization (RWA) is to divide physical assets into multiple valuable tokens, allowing investors to buy partial ownership and thus realize asset liquidity.

In June 2023, a Rolex watch successfully obtained a loan of NT$400,000 through this method. This is just the beginning—antique items, artworks, wines, and real estate can all be tokenized.

The process of RWA includes: setting token issuance quantity → choosing issuance platform → establishing smart contracts → generating tokens → registering assets in trust.

Industry estimates suggest that by 2030, the global RWA market will reach $16 trillion, accounting for 10% of global GDP. This huge market has attracted major asset managers like BlackRock, which has launched a tokenized fund BUIDL to enter the RWA space.

Although RWA growth is unlikely to explode exponentially (since physical assets have fixed value), the growth trend is now established. Long-term investors seeking stable tracks can focus on projects like Maker (MKR).

Total market cap of projects in this sector: $7 billion

3. Artificial Intelligence Cryptocurrencies (AI Crypto)—A Reflection of Technological Revolution

AI cryptocurrencies refer to new types of crypto assets that combine artificial intelligence technology with blockchain. These projects heavily rely on AI in their design and operation to optimize transaction efficiency, enhance security, and implement decentralized smart contracts.

SingularityNET (AGIX) is a flagship AI crypto project. It builds a decentralized economy based on AI, allowing users to license various AI services they develop to other platform users. Use cases include medical treatment comparison analysis, fraud detection in finance, and creative services for artists.

Due to market expectations for future emerging technologies and continuous capital inflow, AI cryptocurrencies with practical value and strong scientific research support often show remarkable gains. Data shows that in the first half of 2024, AI sector ranked third in returns, just behind meme coins and RWA.

If you are confident in technological innovation and willing to take risks, exploring the AI crypto market is worthwhile. Notable projects include NEAR, FET, AGI, among others.

Total market cap of projects in this sector: $25.9 billion

4. Decentralized Physical Infrastructure (DePIN)—Blockchain Revolution in the Physical World

DePIN (Decentralized Physical Infrastructure Network) refers to crypto projects that utilize blockchain technology to connect physical assets and infrastructure in a decentralized manner. This new infrastructure model is safer, more transparent, and more efficient.

JasmyCoin (JASMY) is a representative project in this field. Jasmy is Japan’s first legally registered IoT platform, integrating blockchain with IoT devices, giving users full control over their data, and enabling transparent, verifiable data sharing with third parties.

With increasing emphasis on digital privacy and optimistic market prospects for IoT and big data applications, DePIN projects with real practical value often show impressive growth.

Total market cap of projects in this sector: $20.3 billion

5. On-Chain Gaming (GameFi)—Economy of Virtual Worlds

The concept of gaming tokens has existed for a long time—from Monopoly to Stone Age, Ragnarok Online, and other online games, each has its own virtual economy system. But traditional gaming tokens have a fatal flaw: issuance is entirely controlled by game companies, and players are unaware, leading to rapid depreciation of these tokens.

Blockchain technology changes all that. GameFi, combining DeFi and NFTs, has emerged as a new gaming experience. It grants rarity and ownership to in-game items, making game currencies better at maintaining value.

To extend player engagement, developers continuously create new gameplay. For example, some games turn items into NFTs, allowing players to mortgage them on DeFi platforms for crypto. This combines entertainment with earning potential.

Innovatively, cross-game asset transfer is possible—NFTs earned in one game can be used in another, increasing liquidity and pushing asset prices higher. When profits become attractive enough, more investors and speculators enter, forming a complete industry chain.

While GameFi has broad prospects, like meme coins, it has not yet established a unified mainstream perception. In the first half of 2024, most high-market-cap projects like GALA showed flat or negative returns.

Total market cap of projects in this sector: $14 billion

6. Telegram Ecosystem—The Web3.0 Evolution of Instant Messaging

Telegram is one of the world’s largest instant messaging platforms. Its self-destruct message feature makes it especially valued in the AI era, and it has become a key focus in Web3.0 development.

Beyond messaging, Telegram also supports payments. The @wallet tool within the platform is similar to LINE Wallet, supporting transfers between users. Currently, supported payment methods include USDT, Bitcoin, and the underlying blockchain token TON.

TON is Telegram’s main blockchain, with capabilities far beyond ordinary expectations. Besides transfers, TON supports smart contracts similar to Ethereum, allowing transaction traceability and enhanced security. It can be compared to LINE POINTS, but its versatility far exceeds that.

While fewer people in Taiwan use TON, the global user base is large, and future development prospects are promising.

Total market cap of projects in this sector: $700 million

7. Solana Ecosystem—The Counterattack of Ethereum Killer

Compared to Bitcoin and Ethereum, Solana is a relatively young project, only four years old, but its innovative significance is undeniable.

Solana’s initial goal was to solve two major bottlenecks of Ethereum: slow speed caused by too many smart contract layers, and high transaction fees per layer. The Ethereum founding team could not foresee such explosive growth of applications early on, leading to structural bottlenecks.

Solana adopts an innovative proof-of-history (PoH) mechanism to replace Ethereum’s PoS, significantly reducing transaction times and costs. This breakthrough has made Solana one of the few cryptocurrencies that continued to grow in user numbers after the FTX incident, proving it has surpassed the status of a mere investment tool and become an essential infrastructure for many applications.

Although Solana has not yet entered traditional stock exchanges like Bitcoin, it has been adopted by major global credit card company Visa, which launched Solana payment features settled with USDC stablecoin. In the future, Solana could become a mainstream payment method for daily consumption.

Imagine this future: once Solana’s usage is widespread, companies might pay wages in Solana, and people could pay for most daily needs without converting to other currencies. When that happens, “not accepting Solana payments” would be the exception, requiring currency exchange. Under this mindset, the potential applications of Solana are vast and self-evident.

Historically, the US dollar became the global reserve currency because it could buy the most goods and was accepted worldwide. If a certain crypto can be widely accepted globally, it might become the next “US dollar.”

Total market cap of projects in this sector: $6.8 billion

8. Decentralized Finance (DeFi)—The Ultimate Replacement for Traditional Finance

The original purpose of cryptocurrencies was to bypass the highly regulated or directly controlled banking system—an intermediary in finance.

Why does government intervention in finance provoke widespread resentment? Mainly due to limits on currency exchange quotas, high transaction fees, slow clearing, and potential asset freezes. These restrictions were less impactful in the past, but with rapid technological development, they are increasingly hindering progress. To break this “tyranny,” Bitcoin emerged based on blockchain technology.

Subsequently, various cryptocurrencies and NFTs appeared, continuously improving the decentralized financial system. These blockchain-based assets are collectively called DeFi (Decentralized Finance).

In traditional finance, when you swipe a card, money first transfers to the bank, then the merchant withdraws from the bank. DeFi, on the other hand, enables direct peer-to-peer transfers via blockchain. The difference may seem minor, but in cross-border transactions, it’s significant. Traditional methods involve multiple steps—your money goes through Taiwan’s bank → international intermediary → foreign bank → recipient’s overseas bank—each step involves fees and potential freezes. Blockchain has no such intermediaries, allowing virtually unlimited application scope.

From this perspective, cryptocurrencies are essential daily tools rather than mere investments. The more users, the higher their value. Bitcoin has the first-mover advantage, but newer projects like Ethereum leverage smart contracts and can be applied beyond investment. Solana addresses Ethereum’s efficiency issues.

Therefore, crypto investments must evolve with the times. Rigidly focusing only on Bitcoin is unwise; dynamic selection of the most capital-favored mainstream tracks is necessary.

These multiple positive factors do not represent opportunities for a single coin but suggest that the entire crypto ecosystem may eventually be used like fiat currency. For example, people now exchange yen to travel in Japan; in the future, they might use Ethereum to buy concert tickets. Thus, the attributes and functions of different cryptocurrencies are critical for investment decisions.

While DeFi has broad prospects, it faces significant resistance—mainly because it challenges traditional financial “safety nets.” Additionally, in the first half of 2024, the stock market performed strongly, attracting capital flows, and DeFi’s returns were among the lowest in major sectors.

Total market cap of projects in this sector: $74 billion

9. Other Emerging Sectors—The Eternal Cycle of Sector Rotation

Besides the eight main sectors, the crypto market also has other promising investment directions. In the crypto world, “sector rotation” is a persistent and important phenomenon. Due to economic cycles, policy changes, market hotspots, and other factors, different project types rise and fall in different phases.

Historical review reveals this pattern: in late 2020, Bitcoin became the market focus, with massive institutional inflows. From early 2021, institutional interest in DeFi surged, with capital flowing into Ethereum and its DeFi ecosystem projects like Uniswap and Aave.

Mid to late 2021, the huge potential of NFTs sparked a new investment wave. Popular NFT series like Bored Ape Yacht Club and Axie Infinity quickly gained fame, and new NFT platforms on Solana and Ethereum attracted great attention, with related tokens exploding in value.

From late 2022 to early 2023, Layer 2 solutions like Arbitrum and Optimism performed well, while Layer 1 blockchains like ETH, SOL, and AVAX were relatively weak. Recently, with the launch of spot ETFs and expectations of rate cuts, Bitcoin has rebounded strongly, while Layer 2 projects remain flat.

Underlying these rotations are common factors: technological advances, market trend shifts, and policy adjustments.

Why Must Professional Investors Pay Attention to Sector Differentiation in Crypto?

As the crypto market matures, the era of “all coins rising and falling together” has passed. Different coins have their own investment logic and participant groups. Just as in traditional stock markets where investors ask “which sector is leading during a rally,” crypto investors now think in terms of “which sector is strongest.”

The market does not operate as a single entity; each sector is influenced by different fundamentals, policies, technological breakthroughs, and global economic conditions. In traditional markets, tech stocks often lead during early bull phases, while energy and raw materials outperform during late-stage recovery. Similarly, in crypto, the popularity and investment value of DeFi, NFTs, meme coins, AI cryptos, and IoT-related projects fluctuate with market cycles.

Furthermore, understanding sector rotation opportunities allows investors to diversify risks more flexibly, rather than concentrating all capital in one area. Analyzing the historical performance of various assets across cycles helps predict which sector might present potential opportunities. Deep understanding of market cyclicality also helps avoid “buy high, sell low” mistakes. Studying the patterns of hot and cold sectors enables more scientific and rational asset allocation.

How Can Investors Access and Track Cryptocurrency Sector Data?

To succeed in the crypto market, investors need to utilize various data tools to regularly monitor sector dynamics and cycle characteristics. The most common platforms include:

1. CoinMarketCap
Features: Provides global crypto market data, including real-time prices, market caps, trading volumes, and detailed indicators. It also categorizes projects into sectors or themes like DeFi, NFTs, AI cryptos, etc., facilitating sector-specific research.

2. Coingecko
Features: Similar to CoinMarketCap, offering detailed market data and sector classifications, allowing quick understanding of each sector’s overall situation.

3. Messari
Features: Focuses on in-depth blockchain research reports, market analysis, and comprehensive financial data. It allows users to view performance by industry, making it a top tool for serious research.

All these sites offer clear crypto sector classification features. Investors should develop the habit of regularly consulting these resources, continuously observing sector data trends, and deeply understanding the cyclical characteristics of different tracks to stay competitive in the long run.