What Are Crypto Assets?

A crypto asset is any digital asset recorded on a public blockchain such as Bitcoin, Ethereum or Solana. The term covers cryptocurrencies, stablecoins and NFTs. ASIC uses the broader term digital assets (ASIC).

There is no official way to categorise crypto assets, and different research firms group them differently. This guide sets out the framework Collective Shift uses so you can understand what each asset is for and how the risks differ.

Key Takeaways

• Tier one is bitcoin, designed as a scarce digital form of money outside the banking system.
• Tier two is Ethereum, the most established smart contract platform.
• Tier three covers other tokens, often called altcoins, which we group by use case. They carry much higher risk.
• Stablecoins and NFTs sit alongside the tiers because they do different jobs.
• Categories are a thinking tool. Many tokens fit more than one, and the groupings change as the market changes.

Our Framework for Categorising Crypto Assets

Category	What it is for	Examples	Relative risk
Tier one: Bitcoin	Scarce digital money and store of value	Bitcoin (BTC)	Lower than other crypto, still volatile
Tier two: Ethereum	Main smart contract platform	Ether (ETH)	Higher than bitcoin
Tier three: Altcoins	Other platforms and apps, grouped by use case	SOL, AAVE, LINK and many more	High to very high
Stablecoins	Holding a stable value on chain	USDT, USDC	Depends on backing and issuer
NFTs	Unique digital items and proof of ownership	Digital art, domain names, tickets	Very high, often illiquid

Bitcoin: Tier One

Bitcoin (BTC) is the oldest and most widely held crypto asset. It is designed as a scarce, digital form of money that works outside the banking system, with a fixed supply of 21 million coins. People use it as:

• A store of value, often compared with digital gold.
• A way to move value across borders without a bank.
• Open financial infrastructure that anyone can build on.

Bitcoin has had drawdowns of more than 75% in past cycles and has recovered each time so far, but past performance does not guarantee future results. Its role and risk profile are different enough from other tokens that we treat it as its own tier.

Ethereum: Tier Two

Ethereum is the most established smart contract platform, which means anyone can build and run apps on it, from lending markets to stablecoins and NFTs. Ether (ETH) is used to pay transaction fees, and validators stake ETH to secure the network.

Ethereum faces competition from other platforms such as Solana. We keep it as a separate tier because of its history, developer activity, the value secured on it and the number of other networks built on top of it.

Altcoins: Tier Three, by Use Case

Any crypto asset other than bitcoin can be called an altcoin. We group them by their main use case. Many fit more than one group.

Use case	What it does	Examples
Smart contract platforms (layer 1s)	Run networks that host apps; the token pays fees and secures the network	Solana (SOL), Sui (SUI), Avalanche (AVAX)
Layer 2 networks	Process transactions more cheaply on top of another chain	Arbitrum (ARB), Optimism (OP)
DeFi	Govern or incentivise decentralised finance apps	Aave (AAVE), Uniswap (UNI), Sky (SKY, formerly Maker)
Payments	Mainly used to transfer value	Litecoin (LTC), Dogecoin (DOGE)
Exchange tokens	Fee discounts or benefits on an exchange; not equity in the exchange	BNB (BNB)
Privacy	Hide transaction details	Monero (XMR), Zcash (ZEC)
Services and infrastructure	Provide a resource such as data feeds or storage	Chainlink (LINK), Filecoin (FIL)
Gaming, media and social	Reward participation in games, content or communities	ApeCoin (APE), Axie Infinity (AXS)

Altcoins are much riskier

Many altcoins lose most of their value, and some go to zero. Compare CoinMarketCap’s historical snapshots (CoinMarketCap) from a few years apart and you will see how much the list of the largest tokens changes. Our guide to understanding and managing risk in crypto explains how to think about this.

Stablecoins

Stablecoins are designed to hold a steady value, usually one US dollar. They are used to move in and out of crypto, to pay and to hold value on chain without price swings. Not all stablecoins are equal. The main designs are:

• Fiat backed: backed by cash and short-term government debt held by the issuer, such as USDC and USDT.
• Crypto backed: backed by more crypto collateral than the stablecoins issued.
• Commodity backed: backed by assets such as gold.
• Algorithmic or synthetic: rely on token design or trading strategies rather than full reserves, and have lost their peg in the past.

The key question is whether the stablecoin is backed one for one by reserves that are published and independently checked. See what stablecoins are and DefiLlama’s stablecoin data (DefiLlama).

Non-Fungible Tokens (NFTs)

NFTs are different because each one is unique. One ETH can be swapped for another ETH, but one NFT cannot be swapped for another, even from the same collection. NFTs are used for digital art and collectibles, domain names such as ENS, event tickets, memberships and in-game items. Many NFTs are illiquid, and most collections have fallen sharply from their 2021 and 2022 highs.

How to Use This Framework

1. List what you hold and put each asset into one category.
2. Check how much of your portfolio sits in tier three, stablecoins and NFTs, where the risk is highest.
3. Compare that with the risk you intended to take in your written plan.
4. Revisit the categories as projects change. Tokens can move between groups.

Our guide to creating your personal crypto strategy walks through writing that plan.

Watch: Ben Simpson on this topic

How Collective Shift uses categories in a real portfolio

In our September 2026 portfolio session, the research team described a portfolio stack in layers: Bitcoin first, then on-chain businesses, then optional sector exposure to a theme, with stablecoins always kept as part of the plan.

The team's Module 5 on position sizing adds the key test for every category: owning many coins with tiny positions does not make you diversified, it makes you scattered. Fewer positions you understand, each sized so you could accept it going to zero, is the approach taught to members.

• List every asset you hold.
• Tag each one with a category and a sector, for example layer 1, DeFi or AI.
• Check whether several holdings depend on the same chain.
• Write down a target weight for each category and review it each quarter.

“The sector is important, too, cuz we need to make sure that we're not over allocating in a particular sector.”

Ben Simpson, Founder of Collective Shift (October 2026), in The 30-Minute Crypto Portfolio Review I’d Do Every Quarter

Where this guide comes from

This guide is written and reviewed by the Collective Shift research team. Collective Shift is a crypto research and education company founded in 2020 in Melbourne, and a research and education partner to Coinbase, Swyftx and CoinSpot. Sources used in this update:

• Video: Exactly How I Research and Invest In Crypto Altcoins in 2026, Ben Simpson on YouTube (2025-12-07)
• Video: The 30-Minute Crypto Portfolio Review I’d Do Every Quarter, Ben Simpson on YouTube (2026-10-15)
• Collective Shift Knowledge Hub: How to Build and Rebalance Crypto Portfolios, research session (Sep 2026) (ref 7d3d3a1b)
• Collective Shift Knowledge Hub: Portfolio Allocation and Position Sizing, Module 5 (May 2026) (ref 425b5ce5)

Last updated 30 October 2026. General information only, not financial advice. Consider your own circumstances and seek professional advice before making investment decisions.

General information only. Collective Shift provides research and education, not personal financial advice. We don’t manage your money or hold your crypto. Consider your own circumstances and speak with a licensed adviser and a registered tax agent before acting. Digital assets are volatile and you can lose money. Past performance is not a reliable indicator of future performance. Third-party products are named for education only; Collective Shift does not endorse them and they can change their features at any time.