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          A DEEP DIVE INTO CRYPTOCURRENCY

 



What is Cryptocurrency? 

A cryptocurrency is a form of payment that can be exchanged online for goods and services. Many companies have issued their own currencies, often called tokens, and these can be traded specifically for the good or service that the company provides. Think of them as you would arcade tokens or casino chips. You’ll need to exchange real currency for the cryptocurrency to access the good or service.

 

Cryptocurrencies work using a technology called a blockchain. Blockchain is a decentralized technology spread across many computers that manage and record transactions. Part of the appeal of this technology is its security.

 

Cryptocurrencies can act like real money—in a sense, they are real money—but they take a digital monetary form and are not managed or governed by any central authority. A true product of the digital age, cryptocurrencies operate without the involvement of banks, governments, or any middleman. However, in most cases, you will need to use a digital currency exchange to buy and sell your digital assets.

What provides security is that cryptocurrencies are encrypted (secured) with specialized computer code called cryptography. They’re designed like a complicated puzzle on purpose so that they’re hard to crack (and hack).

 

How Many Different Types of Crypto Are There?

As of April 2021, there are over 10k different types of cryptocurrency.

The different types of crypto generally fall into one of two categories:
•  Coins, which can include Bitcoin and altcoins (non-Bitcoin cryptocurrencies)
•  Tokens

Below, we’ll get into the basics of crypto tokens vs coins.

Crypto Tokens vs. Coins

Encrypted coins and tokens can fall under the heading of crypto. And, generally, they can be listed into two sorts of cryptocurrency: alternative cryptocurrency coins (Altcoins) or tokens.

Alternative Cryptocurrency Coins (Altcoins)

Altcoins usually refer to any coins that are not Bitcoins. Bitcoin is a popular digital currency that’s produced by computational solutions to complicated math problems. It works separately from a central bank or state entity (i.e., government-backed Treasury).

Some altcoins include:

•  Peercoin
•  Litecoin
•  Dogecoin
•  Auroracoin
•  Namecoin

Tokens

Unlike altcoins, tokens are created and given out through an Initial coin offering, or ICO, very much like a stock offering. They can be represented as:

•  Value tokens (Bitcoins)
•  Security tokens (to protect your account)
•  Utility tokens (designated for specific uses)

The Most Common Types of Cryptocurrency

Here’s a list of popular cryptocurrency types and descriptions:

1. Bitcoin

Bitcoin is a type of digital currency; it is “cash for the internet.” More specifically, it’s considered cryptocurrency since cryptography facilitates Bitcoin creation and transactions.

2. Bitcoin Cash

Introduced in 2017, Bitcoin Cash is one of the most popular types of cryptocurrency on the market. Its main difference with the original Bitcoin is its block size: 8MB. Compare that to the original Bitcoin’s block size of just 1MB. What that means for users—faster processing speeds.

3. Litecoin

Litecoin is increasingly used in the same breath as Bitcoin, and it functions practically the same way. It was created in 2011 by Charlie Lee, a former employee of Google. He designed it to improve on Bitcoin technology, with shorter transaction times, lower fees, more concentrated miners.

4. Ethereum

Unlike Bitcoin, Ethereum focuses not as much on digital currency as it does on decentralized applications (phone apps). You could think of Ethereum as an app store.

5. Ripple

It’s more well-known for its digital payment protocol more than for its XRP crypto. That’s because the system allows for the transfer of monies in any form, be it dollars or even Bitcoin (or others). It claims to be able to handle 1,500 transactions per second (tps). Compare this with Bitcoin, which can handle 3-6 tps (not including scaling layers).

6. Stellar

Stellar focuses on money transfers, and its network is designed to make them faster and more efficient, even across national borders. It was designed by Ripple co-founder Jed McCaleb in 2014 and is operated by a non-profit organization called stellar.org.

7. NEO

Formerly called Antshares and developed in China, NEO is very aggressively looking to become a major global crypto player. Its focus is smart contracts (digital contracts) that allow users to create and execute agreements without the use of an intermediary.

8. Cardano

Cardano aka ADA is used to send and receive digital funds. It claims to be a more balanced and sustainable ecosystem for cryptocurrencies and the only coin with a “scientific philosophy and research-driven approach.” That means that it undergoes especially rigorous reviews by scientists and programmers.

9. IOTA

Launched in 2016, IOTA stands for Internet of Things Application. Unlike most other Blockchain technologies, it doesn’t actually work with a block and chain; it works with smart devices on the Internet of Things (IoT).

 

The Future of Cryptocurrency

Some economic analysts predict a big change in crypto is forthcoming as institutional money enters the market. Moreover, there is the possibility that crypto will be floated on the Nasdaq, which would further add credibility to blockchain and its uses as an alternative to conventional currencies. Some predict that all that crypto needs is a verified traded fund (ETF). An ETF would definitely make it easier for people to invest in Bitcoin, but there still needs to be the demand to want to invest in crypto, which might not automatically be generated with a fund.

 

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