TYPES OF CRYPTOCURRENCIES
Back in 2009, when bitcoin was launched, it did not have much competition in the nelly mited era of digital currency. By 2011, new types of cryptos began to come as competitors adopted the blockchain tech to launch their own currencies and platforms. Suddenly the race to create more crypto was on. As of now, there are thousands of different types of cryptos and while each is designed to provide some new function or feature, most are believed to be on similar principles as that of Bitcoin.
To summarise a bit about crypto:
- They are made using a distributed ledger and peer to peer review.
- Crypto is not regulated or issued or backed by a central bank or authority.
- As assets, crypto are generally stored in digital wallets referred to as blockchain wallets which are user managed.
- These are encrypted with cryptography which is a specialised computer code.
TYPES OF CRYPTO
Broadly crypto currencies fall into one of the below categories:
These are programmable assets that live within the blockchain of a given platform.
These can include Altcoins (Non-bitcoin cryptocurrencies) and Bitcoin.
Though many people use the terms interchangeably, it is important to understand how they are different from each other to gain a basic understanding of crypto.
WHAT ARE ALTCOINS?
The name “altcoin'' began as a short form for an alternative of bitcoin and most altcoins were launched to improve upon bitcoin in a way. Some instances of the same include litecoin, peercoin, ethereum and USD Coin.
Similar to bitcoin, some cryptos have a limited supply of coins which helps create demand and reinforce their value. For example, there are a definite number of bitcoins that can be created - 21 million, as decided by the founder of bitcoin. Though most altcoins are built on the identical framework as bitcoin and share some features, each one offers something different. Some altcoins use a different process to validate and produce blocks of transactions. Some might offer new features, like lower price volatility and smart contracts.
WHAT ARE TOKENS?
Tokens are usually formed and given out through an ICO or Initial Coin Offering very much like an IPO. They can be represented as:
- Security tokens (identical to stocks)
- Value tokens (Like bitcoins)
- Utility tokens (For specific uses)
Same as USD, tokens represent value but they are not valuable themselves, in the same way a paper USD value may not be $1. But tokens can be utilised in transactions for other things. A token is different from a coin because of the way it is made within the blockchain of an existing coin like Ethereum or Bitcoin.
TOP 4 CRYPTOS WORLDWIDE
It was the first crypto ever created back in 2009. It was launched by Satoshi Nakamoto and as of today, there are more than 18 million Bitcoins tokens that are in circulation. This crypto depends on blockchain tech which is a decentralised public ledger that assists in recording transactions. It is independent of any government or central bank.
Ethereum is also a much preferable coin having a preferable blockchain network. This currency was not formed to assist other currencies rather it was made as a programmable blockchain. It helps the users to monetise, publish or make applications. Ether is the payment from that was developed on the platform. As of now, it is at the 2nd position among all the cryptos in the globe. It has no limit on its creation and it follows the proof of work system which is an advantage.
This is a 3rd gen blockchain platform and is also a preferred crypto. It works on a proof of stake system. The cardona crypto does not require any kind of high electricity power costs for mining the coins. Cardano has been working to make its network more efficient and sustainable. The crypto of cardona is called ADA It mainly assists in identity management and traceability.
4. Binance Coin:
Binance is one of the top crypto exchange platforms in the globe. Binance coin is a crypto that enables people to trade on a Binance platform. It was created as a token back in 2017 which assists the trades on how to get discounts on the binance trading fees. Now it has been enhanced and can be used for bookings, payments, financial services, entertainments among others.