Virtual currencies or cryptocurrencies, as they are more commonly known, have forever revolutionized the idea of money. As the internet overtook our lives and changed the way we used to do almost everything, it was only natural for new currencies to be developed to serve the dot com world specifically. Cryptocurrencies are digital assets that rely on blockchain technology to ensure their legitimacy and considerably minimize the chances of the system being compromised or hacked. This was one of the main reasons why many people looking to make money jumped headfirst at the opportunity to trade in cryptocurrencies.
Especially since the end of 2017, when the most popular cryptocurrency peaked at 20,000 USD, the number of traders multiplied almost overnight. Even though cryptocurrencies have been around for a little over a decade now, many people know about one or two types, at most. This brings us to the purpose of this article: to boost your cryptocurrency knowledge. Continue reading to learn about a number of the most popular types of cryptocurrency that might interest you.
The start of it all
This is by far the most popular type of cryptocurrency that people often use the two words interchangeably. Despite its prominent status, there’s still too much mystery surrounding its real origins. However, there are several hard facts that we know to be true. Bitcoin was created in 2009 when the earliest adopters started bidding for the then-new cryptocurrency through a lottery-based system. Less than a year later, it gained traction as a legitimate currency that many traders willingly embraced. Thanks to the curiosity of tech moguls, its value soared exponentially, encouraging even average Joes to try their luck trading, hoping to win big. Today, there are only 21 million of this particular cryptocurrency available for trade and consumption. Once they run out, it’ll be up to the protocol whether to release more or not.
The next step: BTC Cash
Following the same framework and serving the same purposes as the traditional BTC, this kind of crypto was created in 2017 with a much bigger block size, which meant that customers could benefit from the faster processing speed. Following the release of BTC Cash, many trading platforms were developed for automated trading decisions based on the rise and fall of the cryptocurrency cash price. These crypto trading platforms use embedded auto trading software to scan the crypto market conditions for investment opportunities that the bidders can utilize to make money. The efficiency of these platforms is keeping the demand for BTC Cash high preserving its value.
The many alternatives
Using the same blockchain technology, Ethereum was created in 2015 as an open-source platform. To better understand how Ethereum works, think of it as a currency designed exclusively for app developers to help them have more control over their platforms. App developers use ‘Ethers’ to pay for transaction fees on the Ethereum network. Today, Ethers are being used by investors who are in the market for other digital currencies. Ethereum is considered to be the second-largest cryptocurrency after BTC. However, Ethereum’s market cap represents only one-tenth of the value of BTC’s.
In 2011 an ex-Google employee created Litecoin to make up for the shortcomings of the dominant BTC. Litecoin was designed to be a cheaper, faster, and more accessible alternative cryptocurrency. While Litecoin runs on a different algorithm than BTC, they share many similar features. As of January 2020, Litecoin’s cap was set at an impressive 3 billion USD, ranking it as the 6th biggest cryptocurrency in the world.
Ripple is more known for its digital payment network features amongst large corporations and banks. When this cryptocurrency was first introduced in 2012, its creators focused on capitalizing on its ability to handle the transfer of vast amounts of money in a matter of seconds. Compared with the humble 3-6 transactions per second (tps) of BTC, Ripple supposedly handles as many as 1500 tps. Unlike other cryptocurrencies, Ripple doesn’t need mining, which allows it to save computing power and avoid network interruption.
In 2014 Stellar Lumen was specifically designed to simplify the process of currency exchange. If you are always sending money abroad, whether for business or personal reasons, using Stellar Lumen will definitely make your life easier on that front. Furthermore, you will appreciate that Stellar is run by a non-for-profit organization aiming to help developing countries that don’t have an abundance of investment opportunities. For that reason, the Stellar organization offers the service of using its services for free. It only makes profits by acquiring public donations.
As the name implies, Tether is probably the most popular type of “stable coins.” Stablecoins have their value associated with real FIAT currency or a predetermined market value to control the volatility of cryptocurrencies. This safety feature makes Tether incredibly popular amongst the more cautious cryptocurrency traders. Not only is it relatively safer than other digital currencies, but it’s also much easier to use. However, given the “pegged” value, you will be denied the extreme profits you otherwise have a chance with trading in BTC, for example. As of January 2020, Tether became the fourth largest cryptocurrency with a 4.6 billion USD market cap.
Developed in China, NEO is targeting smart contracts to help users construct digital agreements on their own. Even though it’s being rumored that NEO is focusing on replacing Ethereum, its lead developer dismissed the idea. His explanation was that NEO has better architecture and allows for simpler integration in the world. However, one advantage that NEO already has over Ethereum is that users can use common programming languages like Java to build their digital contracts.
The most anticipated cryptocurrency is scheduled to be released by the one and only Facebook later this year. Given its massive reach and the sheer volume of transactions that take place on the FB platform, it makes complete sense to create its own digital currency. Since Libra is not officially released in the market, there is very little information about its trading algorithms. However, FB announced that Libra would be run by a new financial services Facebook subsidiary called Calibra.
The world of cryptocurrencies can be very confusing to many people, however, it’s undoubtedly where the future lies. After reading this article, you will be able to hold your own during a conversation with some of your most geeky friends. On a more serious note, it’s imperative you learn about the different types of cryptocurrencies and find ways you can use them for your own benefit.