Before we discuss different types of cryptocurrencies, let’s take a closer look at the concept of cryptocurrency. Cryptocurrency is a virtual currency or you can name it as digital money. It is created by an anonymous group or individual named Satoshi Nakamoto. This is developed with the aim of faster and secure transactions. There are some cryptocurrencies that have physical existence and some of them are virtual which means they are intangible.
Most importantly, the transactions of cryptocurrencies occur within a decentralised framework without any third-party interference. Due to which there is no manipulation by any government or financial institution or bank. That’s why some countries have banned the usage of cryptocurrencies as it is run by a deregulated system.
Types of cryptocurrencies
Here we will discuss some of the most important cryptocurrencies. In fact, there are thousands of cryptocurrencies exist but we will only focus on the most popular ones.
It will not wrong to say that bitcoin is the king of the world of cryptocurrencies. Since its inception in 2009, it has outperformed in terms of its valuation. The crypto experts of bitcoin treasure suggest that if you want to invest or trade in any cryptocurrencies then bitcoin is the best option.
Bitcoin works through a decentralized network called blockchain technology. All the transactions can be viewed by every user in the network. However, only the owner can decrypt the bitcoin who has assigned the private key. There is no third party (any governing body) involvement in the transactions and is purely peer-to-peer transactions.
Bitcoin Up App is a premier trading software founded by the International Bitcoin Council that is a trading bot popular with both beginner and expert traders.
Ethereum comes second in the list of cryptocurrencies in terms of its performance, security, and speed. Unlike bitcoin, it has a different mode of operation. Here developers build decentralized applications in an open-source software platform. Ether is a token that is used for transactions within the Ethereum network. This token can be used for investing in other cryptocurrencies. After Bitcoin, Ether is popular for its market cap, however, the difference is very large in terms of valuation with bitcoin. However, it has got a significant response since its inception and the market is expected to grow in the near future.
Unlike Bitcoin and Ether, Ripple does not work within a decentralized network. It is an international payment platform that allows instant, secure, and low charges transactions. This is used by banks to make cross-border real-time transactions with the highest security, and low cost.
The token used in the Ripple platform is known as “XRP” and it does not require mining. All the tokens are pre-mined and that’s why it reduces the power of computing. Due to this the transactions are faster and reduces the network latency. This is the most trusted and reliable payment platform that allows financial institutions to make cross-border transactions.
Litecoin was developed by a former Google engineer, Charlie Lee in 2011. Likewise, bitcoin this digital currency also works under a decentralized network but it uses “scrypt” to decode. Due to its faster block generation, it allows faster transactions like bitcoin.
Since its inception in 2017, Binance has gained a significant number of participants in the Binance platform for trading. It allows you to trade different cryptocurrencies in the Binance cryptocurrency exchange. The official token of this platform is known as the Binance coin and denoted by BNB. The coin is used for many purposes like payment of different goods and services.
Apart from this, there are hundreds of cryptocurrencies available on the digital currency market. As mentioned above, some of the cryptocurrencies are used for trading investing, and buying other cryptocurrencies, while some are used for application developments and cross border payments. It is expected that the demand for cryptocurrencies will increase in the future and some experts say it may replace the traditional currency system.
The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision.