Cryptocurrency has been around for more than 10 years now, but there are still plenty of people who haven’t heard of it, or if they have, aren’t quite sure what it is and how it works. If you want to learn more about the different types of cryptocurrency out there and where they’re used, this guide will help you understand all you need to know. We’ll look at where they came from, how they work and how you can get started using them yourself!
Crypto What? Cryptocurrency
It’s one of those things that everyone is talking about, but nobody seems able to define. In a sentence, cryptocurrency is just a digital currency; in practice, it’s more complicated than that. There are several different types of cryptocurrency, each with its own strengths and weaknesses. To help you understand which type may be right for you, here are a Beginners Guide To What is Cryptocurrency and how they work.
10 Best Cryptocurrency to Invest In?
So, what are some types of cryptocurrency? While no two crypto coins are alike, they all share a few similar traits. There’s a finite number (21 million) and they are created through public-private cryptography. Generally speaking, there are four categories: store coins, utility coins, privacy coins and security coins. Below is a list of 10 best cryptocurrency to invest in for 2022!
Bitcoin is an open-source project that was started in 2009. It was initially created by a software developer (or developers) who referred to themselves as Satoshi Nakamoto. BTC can be used for peer-to-peer transactions across a network of people or businesses, anywhere in the world, where there is an Internet connection. No one owns or controls Bitcoin, and its production and usage are not controlled by any single person or entity.
There are also no middlemen involved in sending BTC from one party to another–only individuals involved directly with each transaction can access it. At its core, bitcoin’s attraction lies in the fact that it is decentralized: Unlike fiat currencies issued by governments around the world (like USD or GBP), bitcoins cannot be printed at will. In order to get more bitcoins, you have to mine them using sophisticated computer equipment designed specifically for that purpose. If you need more information about bitcoin, check out our Ultimate Guide To Understanding Blockchain Technology. This guide will help make blockchain tech understandable even if you aren’t a techie!
Ethereum is an open-source, public, blockchain-based distributed computing platform featuring smart contract functionality. It provides a decentralized Turing-complete virtual machine, which can execute scripts using an international network of public nodes. Ethereum also provides a cryptocurrency token called ether, which can be transferred between accounts and used to compensate participant nodes for computations performed. Gas, an internal transaction pricing mechanism, is used to mitigate spam and allocate resources on the network. Ethereum was proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher and programmer considered to be a founder of Ethereum. It was initially described in a white paper published on 31 October 2013 titled Ethereum: A Next-Generation Smart Contract and Decentralized Application Platform.
Bitcoin Cash (BCH)
Bitcoin Cash is a cryptocurrency based on Bitcoin. After a group of users perceived that Bitcoin had become too centralized, and after several high-profile disagreements about how to address scaling issues, some members decided to break away from Bitcoin and create their own currency. They forked Bitcoin’s software, increasing the blocksize limit to 8MB and removing Segregated Witness (SegWit). In late 2017, SegWit2x was released with an aim towards solving these problems, as well as providing more capacity for transactions by increasing block size limit at two megabytes. This update is controversial among those who support larger blocks—which some thought SegWit2x would achieve—as it does not increase block size enough to achieve their goals.
XRP is a global settlement network that offers instant, certain and low-cost international payments. Ripple enables banks to settle cross-border payments in real time, with end-to-end transparency, and at lower costs. Released in 2012, Ripple currency has a market capitalization of $1.26 billion (USD) as of June 2017. One XRP is currently worth about $0.20 USD. It’s one of many types of cryptocurrency (more on those below).
Litecoin is a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world. Litecoin is an open source, global payment network that is fully decentralized without any central authorities. Mathematics secures the network and empowers individuals to control their own finances. Litecoin features faster transaction confirmation times and improved storage efficiency than the leading math-based currency. With substantial industry support, trade volume and liquidity, Litecoin is a proven medium of commerce complementary to Bitcoin.
Dash is an open-source, privacy-centric digital currency with instant transactions. It allows you to keep your finances private as you make transactions without waits, similar to cash. Released in January 2014, Dash experienced an increasing fan following in a short span of time. This cryptocurrency was created and developed by Evan Duffield and can be mined using a CPU or GPU. The maximum supply of Dash that can ever be produced is 18 million coins. One advantage that Dash has over Bitcoin is its InstantSend feature which facilitates speedy transactions.
Unlike many other cryptocurrencies, Monero is based on a protocol that is actually privacy-focused. Its blockchain is said to be completely opaque, even from those who use it (if you’re not a miner). It uses a proof-of-work consensus algorithm and aims for both fungibility and decentralization. As an open source project with no pre-mine or presale, it’s also trustless in nature. A few complaints include its use of CryptoNight as its hashing algorithm, which is slower than SHA256 in general and can be successfully mined using consumer laptops or desktops instead of ASIC machines.
IOTA is one of a new breed of cryptocurrency that does not use blockchain technology. Instead, it uses something called The Tangle. IOTA’s creators claim that The Tangle is able to offer more speed and no fees on transactions, which makes it an enticing option for businesses. Additionally, IOTA’s ledger can be used in IoT devices, with executives at Volkswagen (VLKAY) even saying they are considering incorporating The Tangle into some parts of their business. However, critics say there is not enough information on how The Tangle would work as a currency—and several investors have raised questions about its legitimacy as a cryptocurrency.
NEM is a cryptocurrency launched in 2015 by a Tokyo-based blockchain startup. NEM’s defining features are its Proof-of-Importance (PoI) algorithm and Eigentrust++ reputation system. The PoI algorithm rewards users with more coins depending on how much they contribute to network security. The Eigentrust++ system incentivizes nodes to only recognize trustworthy transactions, making it difficult for hackers to make off with large sums of money. NEM also supports multi signature accounts, which require multiple people to authorize a transaction before it can be sent. Although it was originally developed as an altcoin, NEM was separated from NXT in 2016 following a fallout between development teams at both projects.
Dogecoin (DOGE) – Next Big Cryptocurrency?
Created in 2013, Dogecoin was made as a parody cryptocurrency. Even still, its popularity is undeniable – with over 120 billion DOGE coins outstanding and about 1.4 billion DOGE coins worth US$60 million traded on exchanges every day. The key here is that unlike many cryptocurrencies, Dogecoin’s use case isn’t new: It’s like peer-to-peer (P2P) electronic cash rather than a storage platform (like Bitcoin).
The Future of Cryptocurrency
Nobody knows for sure how cryptocurrency will develop over time, but many experts expect blockchain technology to continue gaining mainstream adoption. The future may very well be digital, but what form will it take? Like any market, different cryptocurrencies have their own strengths and weaknesses. And as with all types of currency, a cryptocurrency’s strength is based on its utility and trustworthiness—not speculation or hype. There are numerous factors to consider when choosing your first (or next) cryptocurrency investment; and regardless of which coins you choose, remember that there is no absolute certainty that cryptocurrencies will flourish in years to come.
If you’re looking for a quick, easy way to expand your financial portfolio (and you have $200+ dollars), investing in cryptocurrency might be your answer. If so, it’s important to remember that while there are plenty of potential benefits, they aren’t guaranteed—nor do they come without risk. Before jumping in, research how each currency works and pay attention to how its value fluctuates over time. Once you get started, stick with it; if possible, only invest as much as you can afford to lose (like any investment). You might not get rich overnight by investing in cryptocurrency—but you also might! If at all possible, though, don’t invest more than you can stand to lose because losing money hurts… So much.