Understanding the Different Types of Cryptocurrency
Before investing in crypto mining, you need to understand the different types of cryptocurrency. The first type of cryptocurrency (bitcoin) was launched in 2009.
But with the growth in this industry, there has been the introduction of various kinds of cryptocurrency. Each cryptocurrency has its features and functions, which makes them competitive.
So, in this article were going to help you understand every type of cryptocurrency.
In-depth Explanation of the Types of Cryptocurrency
Before we delve much into the topic, you need to know that cryptocurrencies are coins and tokens. Coins have their blockchain, each having its value, which allows them to be used as money for various transactions. But the tokens rely on the existing blockchain to operate.
The most popular types of cryptocurrency include;
Bitcoin
Bitcoin cryptocurrency was introduced in 2009 by Satoshi Nakamoto, a pseudo name of the brain behind its development. Its main plan was to be independent of any bank or government.
Bitcoin uses blockchain technology to facilitate decentralized cryptocurrency transactions. Currently, bitcoin is the most popular type of cryptocurrency and has over $600 billion market capitalization.
Cardano (ADA)
Although Cardano is a third-generation blockchain program, it’s one of the best types of cryptocurrency. It uses the proof of stake (PoS) method, which has no complex calculations and is less risky.
Furthermore, unlike the proof of work (PoW) technique, this model doesn’t require high energy to operate as it enables the miner to have mining power depending on the percentage of coins they’ve got.
This type of cryptocurrency majorly does identity management by analyzing data from different sources, making the network reliable and sustainable. In addition to that, it helps in auditing a product’s manufacturing path to stop fraudsters.
Tether
Tether, initially RealCoin, is a stablecoin whose main target is to keep the cryptocurrency value stable. It allows for storage of value mode, and its value is based on the fiat currency.
The fiat currency enables cryptocoin in circulation like the US dollar to remain stable.
Tether makes users incur fewer transaction costs, have transparent and stable mining. In addition, it helps bridge the gap between fiat currency and cryptocurrencies, and it maintains the 1:1 ratio with the US dollar in regard to value.
Ethereum
Ethereum is a programmable blockchain that allows network users to develop, publish and monetize and use apps. The decentralized software prevents its users from fraudsters or being under control and interference by a third party.
In addition, it gives all people, regardless of nationality or religion, access to financial products.
This platform is managed by Ether which acts as a form of payment, and it was developed in 2015. The best thing about this type of cryptocurrency is that it doesn’t limit the number of Ethers a user can create.
Binance Coin
This is yet another popular cryptocurrency token that works as a medium of exchange on Binance. Before developing its blockchain platform, it relied on the blockchain of Ethereum.
It’s been operational since 2017 and helps traders get trading fee discounts on Binance.
However, it has now advanced and allows users to make payments for entertainment or get online services.