[2022] What Is Cryptocurrency? and It’s Types

What Is Cryptocurrency?

A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.

Understanding Cryptocurrencies

Cryptocurrencies are digital or virtual currencies underpinned by cryptographic systems. They enable secure online payments without the use of third-party intermediaries. “Crypto” refers to the various encryption algorithms and cryptographic techniques that safeguard these entries, such as elliptical curve encryption, public-private key pairs, and hashing functions.

Cryptocurrencies can be mined or purchased from cryptocurrency exchanges. Not all ecommerce sites allow purchases using cryptocurrencies. In fact, cryptocurrencies, even popular ones like Bitcoin, are hardly used for retail transactions. However, the skyrocketing value of cryptocurrencies has made them popular as trading instruments. To a limited extent, they are also used for cross-border transfers.

Blockchain

Central to the appeal and functionality of Bitcoin and other cryptocurrencies is blockchain technology. As its name indicates, blockchain is essentially a set of connected blocks or an online ledger. Each block contains a set of transactions that have been independently verified by each member of the network. Every new block generated must be verified by each node before being confirmed, making it almost impossible to forge transaction histories.1The contents of the online ledger must be agreed upon by the entire network of an individual node, or computer maintaining a copy of the ledger.

Experts say that blockchain technology can serve multiple industries, such as supply chain, and processes such as online voting and crowdfunding. Financial institutions such as JPMorgan Chase & Co. (JPM) are testing the use of blockchain technology to lower transaction costs by streamlining payment processing.

Types of Cryptocurrency

Bitcoin is the most popular and valuable cryptocurrency. An anonymous person called Satoshi Nakamoto invented it and introduced it to the world via a white paper in 2008. There are thousands of cryptocurrencies present in the market today.

Each cryptocurrency claims to have a different function and specification. For example, Ethereum’s ether markets itself as gas for the underlying smart contract platform. Ripple’s XRP is used by banks to facilitate transfers between different geographies.

Bitcoin, which was made available to the public in 2009, remains the most widely traded and covered cryptocurrency. As of November 2021, there were over 18.8 million bitcoins in circulation with a total market cap of around $1.2 trillion. Only 21 million bitcoins will ever exist.

In the wake of Bitcoin’s success, many other cryptocurrencies, known as “altcoins,” have been launched. Some of these are clones or forks of Bitcoin, while others are new currencies that were built from scratch. They include Solana, Litecoin, Ethereum, Cardano, and EOS. By November 2021, the aggregate value of all the cryptocurrencies in existence had reached over $2.1 trillion—Bitcoin represented approximately 41% of that total value.

How to Invest in Cryptocurrencies?

To invest in Cryptocurrencies, you have to choose the right platform. Because if the right platform is not chosen then you may have to pay extra fees while trading. Similarly, the most popular Cryptocurrency platform in India at present is “ Wazirx ”.

It is very easy to invest and trade in it and its founder is also an Indian. I have also invested in it and have done for many years. You can also invest your money in it if you want.

Types of Cryptocurrencies

If seen, there are many Cryptocurrencies but there are only a few of them that are performing well and which you can use apart from Bitcoin.

1. Bitcoin (BTC)

If we talk about Cryptocurrency and there is no talk of Bitcoin , then it is not possible at all. Because Bitcoin is the first cryptocurrency in the world. Which was created by Satoshi Nakamoto in 2009.

It is a digital currency that is used to buy goods and services only online. It is a de-centralized currency which means that there is no hand of government or any institution on it.

If we talk about today, then its value has increased a lot, which is now around 13 Lacks, the value of a coin. From this you can find out about the importance of its present.

2. Ethereum (ETH)

Like Bitcoin, Ethereum is also an open-source, decentralized blockchain-based computing platform. The name of its founder is Vitalik Buterin. Its Cryptocurrency token is also called ‘Ether’.

This platform helps its users to create a digital token, with the help of which it can be used as currency. Recently a hard fork has split Ethereum into two halves, Etherem (ETH) and Etheriem Classic (ETC). It is the second most famous cryptocurrency after Bitcoin.

3. Litecoin (LTC)

Litecoin is also a decentralized peer-to-peer cryptocurrency which is an open source software released under the MIT/X11 license in October 2011 by Charles Lee who was previously a Google Employee. have gone.

Bitcoin has a big hand behind its creation and many of its features are dangling from Bitcoin. Litecoin’s block generation time is 4 times less than that of Bitcoin. Therefore, the transactions in this are completed very quickly. In this, the Scrypt algorithm is used to do mining.

4. Dogecoin (Doge)

The story of the formation of Dogecoin is quite interesting. It was compared to a dog to mock Bitcoin, which later took the form of a cryptocurrency. The name of its founder is Billy Markus. Like Litecoin, Scrypt Algorithm is also used in this.

Today the market value of Dogecoin is more than $197 million and it is accepted in more than 200 merchants all over the world. Mining in this also happens very quickly as compared to others.

5. Tether (USDT)

According to Coinmarketcap.com, Tether is the largest stablecoin with a market cap of $78 billion as of January 17th.

It uses the blockchain technology of Bitcoin . Stablecoins reduce volatility pegged to the US dollar and euro, and are one of the most popular options for those looking to invest in cryptocurrencies but are reluctant to face volatility.

6. Binance Coin (BNB)

This cryptocurrency is the parent cryptocurrency of the Binance crypto exchange, the world’s largest exchange by volume.

Binance was only launched in 2017 but expanded very rapidly by facilitating trading on its platform. The crypto has come a long way from its price in 2017 which was just $0.10 which increased from 5200% on 3rd January 2022 to 5200%.

According to Coinmarketcap.com on January 17th, Binance (BNB) is ranked fourth with a market cap of approximately $80 billion.

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