With thousands of cryptocurrency and blockchain projects already on the market, it can be very useful to break down the industry into broad sectors. As an investor, if you can’t pinpoint which sector or sectors a project is seeking to address, then you likely have a lot more research to do before investing in that ICO / Protocol etc. It is also very useful to be cognizant of the function or functions of a project when attempting to build a diversified portfolio of cryptos. If you find yourself with a portfolio comprising of Ethereum, EOS, Cardano, Lisk and NEO, you have essentially invested in only one area of crypto – Protocols.
Of course, some projects span a number of sectors. Stellar (XLM) for example, is a currency, a financial gateway, and a smart contracts platform.
Digital Money
An encrypted peer to peer digital currency, decentralized, permissionless, trustless and irreversible. Pure cryptocurrencies seek to augment or supplant traditional modes of value transfer and storage. Bitcoin (BTC), Litecoin (LTC) Vertcoin (VTC) and Nano (NANO), are all currently focused on this purpose, though of course, each is slightly different in execution. Nano, for example, has no fees, while Bitcoin is often seen as primarily a store of value.
Privacy Coins are a subsector which add a focus on anonymity in addition to value transactions.
Examples include: ZCash (ZEC), Monero XMR and PIVX (PIVX)
Platform or Protocols
Platforms aim to be hubs upon which other developers will launch and run their projects or DAPPS (decentralized apps). These protocols offer smart contracts which facilitate the potential exchange of an almost limitless array of assets other than simply money. Successful platforms hope to have many hundreds of other projects running on their protocol and thus issues of scalability and security loom large with platforms. Ethereum (ETH) is by far the most famous example of a platform with its protocol underlying literally hundreds of other ERC-20 tokens. Other examples include NEO (NEO), Cardano (ADA) and EOS (EOS).
Platforms that focus on interoperability or the ability of blockchains to seamlessly communicate and transact together are an important sub-sector of protocols. Examples include ICON (ICX) NULS (NULS) and ARK (ARK).
Finance
A great many cryptocurrencies and blockchains focus on different areas of finance outside of simple peer to peer transfers. These may be broken down into 4 broad sub-sectors.
Payments
Any project that focuses on competing with or usurping the functions of legacy banking institutions and payment processing companies. These cryptocurrencies are attempting to radically improve remittances and processing merchant services. Examples include Ripple (XRP), Stellar (XLM) and OmiseGo (OMG).
Exchanges
Exchanges provide a place to actually acquire and trade cryptocurrencies. Some of these exchanges have launched cryptos of their own which offer dividends or discounts on trading fees. Examples include Binance (BNB), Huobi HT)and KuCoin (KCS).
Lending
This sector facilitates lending between parties without having to utilize a middleman such as a bank. Examples include SALT (SALT) and LEND (LEND).
Funding
Closely related, we have decentralized funding platforms which allow parties to raise capital from the public without large overhead fees. Examples include Acorn (OAK) and KickCoin (KICK).
Supply Chain
Supply chain seems to offer clear use cases for immutable ledger and blockchain record keeping. Supply chain projects tackle logistics and product movement. They aim to digitally track traded physical goods through the entire supply chain. The complexities of global trade and the inefficiencies therein are their area of focus. Examples include WaltonChain (WTC), Vechain (VEN) and Modum (MOD).
Internet of Things
Lastly, the Internet of Things or IoT. IoT refers to the network of physical devices, such as, smartphones, vehicles and home appliances which are embedded with the sensors, software, and connectivity to allow them to communicate and exchange data, thereby blurring the line between the concrete and digital world. These networks of devices are increasingly able to communicate autonomously opening a world of new possibilities. A car that not only drives itself, but also refuels automatically, a factory that autonomously produces new devices, but only as required by market demand, a watch that monitors your health and calls emergency services should the need arise, a smart power network that trades your excess solar sourced energy and which dynamically switches power supplier to reflect the greatest cost -saving efficiency. The applications are near limitless. Examples include IOTA (MIOTA), IoT Chain (ITC) and Ethereum Classic (ETC).
Other Sub Sectors
Social Media: Brave (BAT) & Digital Content: Tron (TRX)
Finance: Investing Genesis Vision (GVT) / Insurance: Byteball Bytes (GBYTE)
Big Data / World computers: Golem (GNT) / Databases: Everpedia (IQ)
Data Cloud Storage: Oyster (PRL)
Digital Identity: Personal Identity Security (Ontology ONT)
Medical: Medical Chain (MTN)
Many other sub-sectors exist within the crypto-sphere, but hopefully, this will serve as a useful introductory overview of the current structure of the industry.