Bitcoin is one of the most famous cryptocurrencies – so much so that sometimes people will use the word Bitcoin when they mean cryptocurrency!
It had become almost interchangeable to the point people will know you mean cryptocurrency when you said Bitcoin. Since its revolutionary arrival to the market in 2009, it has become quite controversial.
Bitcoin was the spearhead that made room for more cryptocurrencies and really showed the power of the digital currency.
What made cryptocurrency exciting, and it still is, is it offers new ways to invest and buy goods. But it is more than that – it is how cryptocurrency works and the risk involved. The potential returns are enormous, but the market is volatile.
There are so many different types of cryptocurrency on the market, and that term can be used to cover it all. It even covers tokens – but tokens and crypto coins are different – and you should know the difference.
What is the difference between tokens and crypto coins?
When you discuss cryptocurrency, you will hear the terms coins and token. Here is the difference.
Tokens are more interesting than coins because they are more than digital cash. Tokens can be used for a wide range of things. They are generated on top of an existing blockchain and can be used to track products, verify identities, grant access to apps and certify that an NFT is unique.
NFTS is non-fungible tokens that are unique items that cannot be replaced with something else. For example, you could trade a DOGE coin for another DOGE coin, but you couldn’t trade one NFT for another as they are unique.
Coins are digital coins created on their blockchain, just like regular cash. It can be exchanged just like regular cash too.
Do we need so many types of cryptocurrency?
If there is a group of people who love to take something and turn it around to see what it looks like in another way, it is software developers. They took blockchain technology and created something different with the source code.
There are over 4,500 different cryptocurrencies on the market, and that is ever-increasing.
What has led to the rise in cryptocurrency?
There are a few reasons that cryptocurrency has seen such a meteoric rise in popularity. The first is that it is easy to create a cryptocurrency – if you can play with a source code, you can create a new coin. One of the networks that can be used to create coins is the Ethereum network.
The rules of the software code might change, these are called forks, and that is how the new crypto coin will be created.
Another reason that cryptocurrency has skyrocketed in popularity is that people have a better understanding and access to it. While there are some cryptocurrencies that are high in terms of cost, there are others that are more accessible.
It is also easier to check the rates than ever before with websites like HodlRate.
So while you are pondering, now is the right time to buy an NFT, a DOGE coin, or maybe even create your own cryptocurrency. Here are the six big ones that you should know about.
Six types of cryptocurrency you need to know about
If you ask a room full of people to tell you one crypto coin, the most common answer is going to be Bitcoin. It is the first, but is it the best? Anything that isn’t Bitcoin is often referred to as an altcoin since Bitcoin is one of the largest and most well-known.
The best coin really comes down to personal choice. They all have unique features, and so it is what meets your needs that matters.
With that, here are the six that you need to know about – starting with the coin that is regarded as the first.
No list of cryptocurrencies that you need to know about is complete without Bitcoin. It is the titan and commonly known as our first decentralized currency to use blockchain, support digital transactions and facilitate payments.
It is a big deal.
Rather than relying on a central bank (such as the Federal Reserve in collaboration with the US Treasury) or third parties to verify transactions (such as your local bank, credit card issuer, and merchant’s bank), Bitcoin’s blockchain acts as a public ledger of all transaction data in the history of Bitcoin.
The public ledger means that someone can prove that they own the Bitcoin they intend to use, which keeps the trade safe. Using this method prevents fraud and doesn’t allow unapproved currency tampering.
With Bitcoin, peer-to-peer transfers are usually less expensive than any other currency exchange.
Binance is an exciting option because it can facilitate tokens, or it can be used as a type of currency. Binance Coin is a cryptocurrency that can be purchased on the Binance crypto trading platform.
The Binance coin traded with a BNB symbol and started out being based on the Ethereum network – however, it is the native currency of the Binance blockchain, aka the Binance Chain.
Binance has a past though; it was banned in 2019 in the US on regulatory grounds – to counteract this, the Binance investors opened the Binance.US exchange that complied with the United States Financial Crimes Enforcement Network and all other US laws.
Ethereum is the platform that uses blockchain tech to make smart contracts and other applications. These applications don’t need to be hosted on the typical app exchanges like Google Play Store or Apple.
When it comes to keeping the revenue your app makes, this is one of the best ways to do it. Typically other app exchanges will take up to 30% of the sales.
Ether the taken that facilitates transactions on this network. This means that Etherum offers both a sandbox for app development and a cryptocurrency – Ether.
Dogecoin stands out from all of the other coins in more ways than one. It was initially a joke, aimed at crypto-bros and Bitcoin. However, it was quickly one of the hottest things you could buy, and ended up having a $50 billion circulation.
It more than earned itself a top spot and is one of the 5th most valuable cryptocurrency markets.
There are also two huge investors that help DOGE make even more of an impact. Both Mark Cuban, investor and Dallas Mavericks owner, and Elon Musk, CEO and investor, tweeted multiple times about their support and investments.
Those familiar with the DOGE meme on the internet will know that the mascot is a Shibu Inu dog.
What makes Dogecoin great, aside from its funny roots, is that it makes it easier and faster for payments to be recorded, and there are no coin limits. Bitcoin was designed with a cap in mind.
The fact that XRP may be any currency makes it sound complex. XRP, on the other hand, is only a token that signifies value transfer throughout the Ripple Network.
The transaction is remarkable if the transaction cost is $0.00001, and that $0.00001 vanishes from the platform. As a result, the world is virtually $0.00001 worse off with each transaction.
RippleNet is a payment-provider network for institutions. Money service firms and banks that employ RippleNet technologies fall under this category. This eliminates friction in the transactions.
XRP, according to the Ripple website, is the quickest and most scalable virtual currency. Yet, like many other cryptocurrencies, it is quite volatile.
Even though Ripple is often less expensive than other cryptocurrencies such as Ethereum, Bitcoin Cash, and Bitcoin, it is still the market’s third most valued asset.
Tether wasn’t always called Tether; when it was initially launched in 2014, it was known as RealCoin in July, and by November, it was rebranded.
Tether, or USDT, is a cryptocurrency based on the blockchain. These digital coins were backed by a similar quantity of regular fiat money. Euros, pounds, and the dollar are examples of traditional fiat currencies. These are kept in a specific bank account.
Tether is a stablecoin, which is a newer type of cryptocurrency.
Stablecoins are designed to maintain cryptocurrency prices as constant as possible. The dramatic spike and fall in the value of most cryptocurrencies are well-known. Tether was created to serve as a link between cryptos and fiat currency. The goal is to present users with the most transparent alternative possible. In addition, transaction fees are kept to a minimum. Learn more and browse Swyftx’s other great content!
It doesn’t take much between learning about cryptocurrency, tokens, and blockchains to finding out if it is something you should be investing in.
Like with any investment, though, you must understand as much as you can about the market. This is only the surface when it comes to cryptocurrencies. There are dozens of distinct digital currencies based on blockchain technology that is utilized for a wide range of purposes in the digital economy.
For a no-nonsense look into how you can buy a cryptocurrency and what you need to know before you start trading, check out this great guide: Crypto Explained: Top Things You Need To Know Before You Start Trading.