Four different kinds of cryptocurrencies you should know
Cryptocurrencies have made their way into the supply chain to streamline transactions through decentralized digital peer-to-peer networks. You can check the bitcoin buyer platform to begin bitcoin trading with the right tools, trading strategies, and guidance from experienced traders. The underlying technology of cryptocurrencies is blockchain, which people initially created to facilitate the Bitcoin digital currency. However, the underlying technology has far more potential than meets the eye. There are now various cryptocurrency types available for use in different applications.
Developers decided to improve on bitcoin’s code and create new coins with specialized features from which they could derive many benefits, including higher transaction speeds, lower transaction costs, and improved security. Each asset has its unique technology and usage, but they all share some commonalities in how they are developed and used. Bitcoin’s rival as the most popular type of cryptocurrency is Ethereum.
To begin with, we must know what cryptocurrency is. The term “cryptocurrency” is derived from the word “cryptography,” which refers to various methods employed to secure data against unauthorized access or alteration. Cryptography ensures that any information stored or transmitted using a cryptocurrency cannot be read or altered by any individual other than its intended recipient. In a nutshell, cryptocurrencies are data-based assets that function as currency.
Here are some of the most popular types of cryptocurrencies:
Privacy-Focused cryptocurrencies:
Zcash (ZEC) and Monero (MXR) are privacy-focused cryptocurrencies that enable users to maintain anonymity. Transactions in Zcash are obfuscated using a zero-knowledge proof, while transactions in monero use stealth addresses and ring confidential transactions. As a result, these cryptocurrencies offer an option for users to send or receive money without revealing their identity to the rest of the world.
Stablecoins:
“Stablecoins” are currencies designed as hard assets that don’t fluctuate in value much concerning other currencies, commodities, or securities. They also have a fixed rate of value with their hard caps set at a set ratio to ensure that the currency does not lose its value over time.
Cryptocurrency Payment Networks:
The cryptocurrency payment network type includes the likes of Ripple (XRP) and Stellar Lumens (XLM). They are used as a source of liquidity for banks and other institutions to process payments between one another using blockchain technology. In addition, these networks use their native token to transact in other hard assets as a bridge currency.
Cryptocurrency Payment Gateways:
Payment gateways are used to conduct transactions on websites and online shopping platforms. They provide an alternative to traditional payment methods such as credit card payments by making cryptocurrency payments easier for merchants and customers. Some examples include Coinbase and Shift card.
Asset Management/Protection Tokens:
These cryptocurrency tokens are used as a type of investment. They allow investors to lock their assets in a smart contract, which means the token serves as an altcoin that would only increase in value if the underlying asset increases or decreases. Some popular cryptocurrencies which fall under this category include Augur (REP), Maker (MKR), and DigixDAO (DGD).
Utility Tokens:
A “utility token” is a cryptocurrency token that provides access services to an app or other platform where its use can lead to additional functionality such as voting rights, access to premium services, discounts on transactions, or membership in exchange for paying fees or contributions.
Public Cryptocurrencies:
A public cryptocurrency is a cryptocurrency available for use by the public. Instead, they are typically accessed through an open-source code, allowing anyone to review the code and create a version of the currency. Examples include bitcoin (BTC) and Litecoin (LTC).
Cryptocurrencies can be classified according to characteristics that make them unique, such as type, purpose, or underlying technology, which you can use to understand how they work. In addition, each has different features that make it suitable for different applications in the real world.
These tools provide users with innovative solutions that cater to varying needs in the international market and make transactions easier, faster, and more secure than ever before. The most basic way to classify a cryptocurrency is by the features that make it unique.
The most popular types of cryptocurrencies include Bitcoin, Litecoin, Dogecoin, and Ethereum. A public blockchain provides transparency in the form of public ledgers. A private or permissioned blockchain is private and does not provide transparency through its public ledger. It also allows more users to participate in mining, making transactions faster but slightly more expensive than bitcoin.
Meme coin:
Dogecoin is a popular cryptocurrency created as a reaction to the fees charged by bitcoin. In addition, it was created as a fun currency that can be used e by people on internet forums and social media websites.
With Ethereum, you can create your cryptocurrency, set a fixed value for each token, and even hold an ICO to fund your project. The likes of DigixDAO (DGD), Augur (REP), and Golem (GNT) have been built on the ethereum network. They serve as investment coins or asset-backed cryptocurrencies because a hard asset backs them. For example, DigixDAO allows users to buy gold bars using DGX, its native token built upon the ethereum blockchain.