Cryptocurrency is a digital currency, created and used by private individuals or groups. It is entirely digital. They don’t print money or mint coins. It is all done online. They are encrypted with a computer code called cryptography which is like a complex puzzle so that is hard to hack.
There are 10,000 different types of cryptocurrencies and they fall into two categories:
Coins- bitcoins and altcoins (non-bitcoin crypto. It includes dogecoin, auroracoin, peer coin, litecoin. It provides quick transaction speed, secure privacy, proof of stake, etc.) and Tokens (Ethereum, Ripple, Omni, Waves are self-supporting I.e they have their systems and protocols.
Lets get to know the different common types of cryptocurrencies –
Satakoshi Nakamoto proposed an electronic payment system that is established on a peer-to-peer network that is supported by cryptographic evidence instead of relying on trust or the third-party system.
Bitcoin transactions are registered on a public ledger using blockchain technology so everyone in the world can verify who gets paid first. Bitcoin allows 3-6 transactions per second.
It was launched in 2017 and is one of the most popular types. The main difference with the original bitcoin is its 8MB block size. This means faster processing speeds.
It is the same as bitcoin.
Litecoin was created by Charlie Lee (a former employee of Google) in 2011. It has shorter transaction times, lower fees and more concentrated miners.
It is like an app store I.e it does not focus much on digital money as it does on decentralized apps. It is looking to return restraint to its creators instead of the mediators. Only the original creator can make modifications to the app. Tokens are called Ether. Ethereum allows 15 tops (transactions per second).
It is not blockchain-based. Ripple is for larger businesses and corporations as they require to move big amounts of money across the globe. The coinage is termed XRP. It is known more for its digital payment protocol than for its XRP crypto. This is because the network allows transfer in any form- dollars, bitcoin, or others. It can handle 1,500 tips.
Stellar focuses on money transfers. This network makes the transfers simple, quick, and is more efficient. In 2014, Jed McCaleb designed Ripple and is operated by a non-profit organization called stellar.org.
The goal is to aid developing economies that may not have access to traditional banks. It does not charge its users/institutions for using its stellar network.
NEO was developed in China and was then called Antshares. It focuses on smart contracts which allow users to create and execute agreements without intermediary use.
Erik Zhang (lead developer of NEO) said that NEO has 3 distinct advantages- better architecture, developer-friendly smart contracts and digital identity.
Founded by Charles Hoskinson. It is also called ADA. Cardano is used in obtaining digital funds. It claims to be the only coin with a scientific philosophy and research-driven approach.
Internet of Things Application
IOTA was launched in 2016. It does not work exactly with a block and chain but it works with smart devices on IoT. To use it, you have to verify two previous transactions on the IOTA ledger called the DAG (directed acyclic graph). IOTA creators call it The tangle.
Its objective is to provide enhanced privacy to its users as compared to other cryptos. It is based on bitcoin’s codebase, and the transactions are transparent.
Zcash Has selective disclosure for auditing purposes.
Its currency is secure, private, and untraceable. Monero was launched in April 2014. It is donation-based and community-driven. Ring signatures (a special technique) enables its user’s complete privacy. Due to its unsavory reputation, it is associated with illegal operations globally.
Dash was launched in Jan 2014 by Evan Duffield as Xcoin and later in March 2015 rebranded as Dash. It is an open-source cryptocurrency and run by master nodes (a subset of users) dash is an altcoin forked from bitcoin protocol.
It was launched in 2013 by BC Next and used proof-of-stake for transactions. Hence, there is a static money supply. No mining takes place, unlike bitcoin. Nxt has a sophisticated core infrastructure. Nxt plugins are not included in a sandbox and allow external developers to add features.
It forked from bitcoin software and uses bitcoins code and proof-of-work algorithm. It can store information in its blockchain transaction database. “.bit” is a top domain in name coin and serves via a decentralized domain name system.
Developed by Billy Marcus and Jackson Palmer. It features the face of the Shiba Inu dog as its logo from the doge meme. Having originated as a joke makes it difficult to take it seriously and has a long history of scams.
It is a proof-of-stake Crypto. It aims to deliver interoperability among blockchains. It connects permission and permissionless blockchain, oracles to work together. Its relay chain allows “parachains” for specific cases. What sets it apart from ethereum is that it allows developers to create their blockchain using the Polkadot chain security.
Chain link was developed by Sergey Nazarov and Steve Ellis.
It is a decentralized oracle network, bridging gaps between ethereum and data outside it. Blockchains lack the ability but chainlinks decentralized oracle allows it.
It was launched in 2014 and allowed the easy transfer of other cryptocurrencies back to the US dollar. It describes itself as a blockchain-enabled platform designed to facilitate the use of fiat digitally. Tether is a popular group of stable coins. Its price is tied directly to the US dollar.
Binance coin (BNB)
Changpeng Zhao founded BNB. It is a utility cryptocurrency. Binance coin operates as a payment method for fees associated with trading on the Binance exchange. Those who have tokens can trade at a discount. It is one of the widely-used exchanges based on trading volumes. It uses a proof-of-stake consensus model.