It wouldn’t be wrong to say that cryptocurrencies have taken the world by storm. But, while there was a time when you could count the number of cryptocurrencies there were on one finger – Bitcoin, today, there is a whole market of crypto coins for investors to choose from. If you’ve been following the cryptocurrency investment space for a while, you already know of the most famous coins that one can invest and trade in, which is mainly due to their soaring prices, but the crypto market has come a long way from its humble beginnings. Few people know this, but cryptocurrency can be divided into three main types – tokens, altcoin, and of course, Bitcoin.
It should be noted that these three main types of cryptocurrencies are brought together by the blockchain, of which, Bitcoin can be considered as the first blockchain. But, computer technicians didn’t stop there, and created many other alternatives as well, such as Altcoins. Some great examples of altcoins include Cardano and Litecoin. Another form of cryptocurrency that was created is known simply as a token. Some examples of these tokens include WePower and BitDegree.
Bitcoin is the invention of one Satoshi Nakamoto (not a real name) and was first introduced to the world in 2008. While the coin’s initial value was only a few dollars, today a single Bitcoin can cost upwards of 30 thousand dollars (depending on market volatility). Bitcoin has had a revolutionary impact on cryptocurrencies and the world of digital transactions as a whole. Today, many individuals and large corporations are investing and trading in this digital currency, and it could one day even be used for purchasing products or services just like traditional fiat money. Although current regulations prohibit its use, many financial experts are expecting that governments will take on a softer approach in the not-so-distant future regarding digital transactions using Bitcoin as well as other cryptocurrencies.
Altcoins have been under the radar until recently. If you haven’t already guessed, they are an alternative to Bitcoin but can be very different in terms of the algorithms they use. A good example of this difference is Factom, which is an Altcoin that works on the POS (Proof-of-Stake) system. This means that rather than having miners like Bitcoin and many other cryptocurrencies, there are stakers,who verify the transactions. These verifications are selected beforehand unlike cryptocurrency mining where everybody rushes to increase their cache by cracking the code. Other examples of Altcoin, such as Ethereum or NEO weren’t even designed to be used for digital transactions but were designed for creating apps on blockchain, which happens to be the most popular way of creating cryptocurrencies nowadays. Ethereum is also different because it uses A Smart Contract, which has been designed to execute any transaction automatically when certain functions are triggered. These functions or ‘triggers’ have been written into the contract at the time of its creation.
This is the third and final type of cryptocurrency that you can invest in. Tokens are completely unique since they do not use their own blockchain, but rather, use decentralized applications or dApps for short. The dApps can be built to use smart contracts, which is the reason why they use tokens. These tokens can also be bought and sold; however, the transaction fees are paid in NEO or Ether since all transactions are still verified by the nodes on the NEO or Ethereum blockchain.
For those of you who are wondering why it is called cryptocurrency that’s because it uses the same technology, the Allied Forces used during World War II. Back then it was known as cryptography and was a technology that was used to protect sensitive information and messages from the Nazis. Today, cryptography has been put to use by computer technicians in many ways, one of which is cryptocurrency. If you are new to Bitcoin trading and want to find out more cool information such as this, investment techniques, and more, visit the bitcoin-prime app today.