What Are the Different Types of Cryptocurrency?

The cryptocurrency market has evolved from just a couple of famous crypto assets like Bitcoin (BTC) and Ethereum (ETH) to a multi-billion dollar market cap with thousands of digital assets. Today, cryptocurrencies are used both as digital cash, a store of value method and as a means for developing digital ecosystems with decentralized applications and smart contracts that use blockchain technology.

There’s great appeal to cryptocurrency, which has inspired developers to create their own. Digital currency overcomes all of the limitations of fiat currencies such as USD or EUR. They use blockchain technology that enables fast, secure, and relatively anonymous transactions between people.

These cryptos are then convertible on crypto exchange platforms into thousands of other crypto assets or fiat currencies. All cryptocurrency transfers and conversions are available in just a couple of clicks, as opposed to bank transfers and money exchanges that can last far longer.

So, since the appearance of BTC in 2009, developer teams all over the world have realized the potential of cryptocurrencies and come up with thousands of coins and tokens that can be used for different types of transactions or as developer tools.

Let’s take a look at some of the most popular cryptocurrencies and learn some basic information about them.

Bitcoin (BTC) – The Leader of the Crypto Market

Every list of the most popular cryptocurrencies has to begin with Bitcoin, the first and most traded digital asset that holds the highest market capitalization. Since the launch of the BTC blockchain in 2009 by Satoshi Nakamoto, the currency has reached major market popularity, creating a real crypto craze among both crypto enthusiasts and ordinary people who started developing an interest in investing in Bitcoin.

Numerous pay services and companies accept payments in Bitcoin today, and it seems that the coin is only growing both in popularity and value. Although it started off as a form of digital cash, it’s now used for all sorts of financial transactions.

The BTC blockchain is the first crypto blockchain on the web, and its advanced network software has been an inspiration for scores of new cryptocurrencies. The fact that big-time investors are investing large sums of money in BTC just shows that the leader of the crypto market definitely has a bright future.

Most Popular Altcoins

Apart from Bitcoin, there are thousands of other cryptocurrencies, popularly called altcoins, since BTC is the original crypto coin. Sure, you can use all of these cryptos simply as digital money, for buying products and paying for services, but they are actually much more.

In other words, different digital currencies are developed for various purposes, or with different utilities in mind. This is why it’s worth exploring different cryptocurrencies, to see how you can benefit from investing in different assets and what you can actually do with them.

Below are some of the most popular altcoins today.

Ethereum (ETH)

Ethereum (ETH) is one of the most popular altcoins, whose popularity rivals that of Bitcoin, but the two cryptos aren’t really competitors because they have different functionalities and complement each other.

It is a decentralized web platform which enables users to create smart contracts and decentralized applications (DApps) that can be used independently of any third party or central authority. The aim of the Ethereum platform and blockchain is to enable the creation of a fully decentralized portfolio of financial services and products that can be freely used by anyone in the world. 

Basically, Ethereum enables the creation of web platforms, services, and applications powered by its crypto token Ether (ETH). ETH is very popular among developer teams and startups, since it enables the creation of all sorts of web apps. Some of the great DApp examples based on Ethereum are Uniswap, a crypto swapping service, Pool Together, a no-loss lottery system, and Foundation, a popular platform for investing in culture.

When developers use the Ethereum blockchain to develop their platforms and apps, they use ETH to power the structural processes while developing their software. Nowadays, ETH has evolved into a very profitable cryptocurrency exactly because it can provide people with much more than just electronic cash services. There are also several famous ETH forks, such as Ethereum Classic.

Litecoin (LTC)

Litecoin was launched in 2011, which is just two years after the introduction of Bitcoin as the first crypto in 2009. LTC was developed by a former Google employee named Charlie Lee.

The LTC blockchain is based on open-source technology within a decentralized global payment network without the control of any single institution, company, or individual. This characteristic makes Litecoin a highly democratic solution for payments and money transfers since no central bank or state institution controls the network.

LTC uses a specialized software scrypt as a proof-of-work method to make sure there are no double-spending or fraudulent transactions. This scrypt can work with the computing power of usual user CPUs.

LTC is very similar to BTC in its basics and ways of functioning, but its blockchain generates new blocks far faster by comparison. Thus, it offers a quicker transaction process with less time required for transfer validations. Litecoin is a very fast and easy-to-use currency if you are looking for a quick payment or transfer method to move money quickly.

Ripple (XRP)

Ripple is a popular cryptocurrency that doesn’t have a blockchain but has a distributed consensus ledger with a network of servers that act as validation points for transactions instead. Ripple is a great crypto for enterprise transactions between companies and corporations that want to move multimillion-dollar sums internationally without all the hassle of bank transfers and paperwork.

XRP is best known for its digital payment protocol that allows the transfer of money regardless of currency. The Ripple network can process up to 1,500 money transfers per second, which is an enormous amount compared to other cryptos such as BTC and ETH. This is why Ripple is a top choice for moving large amounts of money around the globe.

ZCash (ZEC)

ZCash is one of the popular altcoins that was built based on Bitcoin’s original software code. This currency was developed by a team of experienced scientists from top institutions such as the John Hopkins Institute.

The main characteristic of ZCash that makes a difference compared to numerous other altcoins is its focus on transaction privacy. People who choose to send funds in the form of ZCash know that the identity of the sender and receiver won’t be revealed.

Also, the amount of ZCash you send is kept private, so not even the sum of a transfer is disclosed to any third party.

Bitcoin Cash (BCH)

BCH is one of the most successful altcoins that started out as a hard fork of the original BTC blockchain. Forks are processes that happen within the community of a certain cryptocurrency when different developers or parts of the community want to take that currency in a different direction.

If a large enough part of the community wants to initiate and include some changes in a certain coin’s technology and properties, and the other part of the community disagrees and wants things to stay the way they are, then a fork happens. Forks result in the creation of new cryptocurrencies that are based on the same blockchain as the original crypto, but with different features than the first coin.

In 2017, Bitcoin Cash appeared as a result of a hard fork within the Bitcoin network, mainly because of a disagreement regarding the scalability of Bitcoin. The size of a block of the BTC blockchain is 1MB, and a part of the community wanted to increase this size so that each block can accommodate a larger number of transactions. This is the main reason the split happened.

The BCH blockchain has an increased capacity of 8MB which enables far more transaction data to be processed through the blockchain.

Monero (XMR)

Monero was launched in 2014, and it is a great example of a popular cryptocurrency that is focused on user privacy and security. The developer team behind XMR is made up of cryptography enthusiasts that value privacy on the web above all, which is why they decided to create an untraceable currency that avoids all scrutiny by financial institutions and government agencies.

Monero uses ring signatures in order to absolutely preserve the privacy of both senders and receivers. A group of crypto signatures appear on the network for a certain transfer, and all of these signatures look like they are valid, but actually, only one of them is real.

Thus, anyone who would like to find the original signature would reach a dead end since the real signature can’t be isolated. This technique provides complete privacy for anyone who’s made a Monero transaction.

Unfortunately, exactly because of these highly secure features, Monero has been linked to individuals engaging in criminal activities and illegal transactions, but we shouldn’t judge a cryptocurrency based on its abuses.

Stellar Lumens (XLM)

Stellar Lumens are the currency of the open-source Stellar platform and its blockchain which was specifically created to provide companies with quick and easy solutions for large money transfers. Stellar connects financial institutions around the world, providing businesses with an ideal method for fast and reliable international money transfers.

Traditionally, large bank transfers usually take days or sometimes weeks and involve several intermediary banks in order to process large sums. All of this is followed by extensive paperwork and bureaucratic procedures which can cost a lot of money because of all the transaction fees involved.

Stellar Lumens eliminate all of this, providing enterprises with a trustworthy, high-quality international transfer method that enables international transactions between any currency. It was developed by Jed McCaleb, one of the founders of Ripple.

NEO

NEO is one of the main Ethereum competitor platforms, and it comes from China. It was developed by crypto enthusiast Erik Zhang with the aim of becoming a global digital ecosystem that enables smart contracts, DApps, and facilitates the easy transaction of funds.

NEO aims to enable users to conduct all sorts of smart contracts and agreements without the need for a third party as an intermediary in business deals. All the details of smart contracts are left to the parties involved, and no one else can interfere in their agreements.

The cool thing with NEO is that it can be integrated with various programming languages, while users first have to learn the programming languages native to Ethereum in order to conduct smart contracts and create DApps based on the ETH blockchain.

Cardano (ADA)

Cardano (ADA) was founded by a group of developers, including Charles Hoskinson, one of the people who initiated the Ethereum project. Hoskinson disagreed with the other members of the Ethereum developer team because he wanted to turn ETH into a for-profit venture. In contrast, others wanted to keep the non-profit open-source structure.

Subsequently, he left to help launch Cardano with a team of mathematicians and engineers. They created a blockchain after extensive research that involved over 90 scientific papers regarding blockchain technology. So basically, Cardano has a serious scientific background in terms of sustainability.

There is literally no other crypto that is the fruit of such extensive scientific research, and this makes ADA stand out from other proof-of-stake cryptocurrencies. It is predicted that the Cardano blockchain will possibly be capable of even more development processes and smart contract capabilities than ETH, and this is why some crypto enthusiasts call it the Ethereum killer. Keep in mind that this is a long shot, since ADA is still in the early stages of its development.

The final aim of ADA is to become one of the main global financial operating systems that work on a decentralized blockchain with no central authority, similar to Ethereum, but with a broader portfolio of services and capabilities.

A Few Words Before You Go…

The cryptocurrency market offers thousands of different coins and tokens for various uses. Most cryptos don’t achieve widespread popularity, but those that do usually require time to get accepted by the community and to be used widely.

This post includes some of the most popular and most traded cryptos on the market that you might want to include in your digital asset portfolio.

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