Cryptocurrency Types

Different types of cryptocurrencies

Almost 2000 different cryptocurrencies are out there on the market by now. One could easily get lost among all the different types. Not all are interesting for investors. The question is, how do you know, which are and which are not? New currencies are continually emerging. Some are going to stay and become very powerful in the market. Some will disappear as quickly as they appeared. On this page, you’ll find some facts that will help you understand digital currencies better and what their differences are.


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Bitcoin

It is obvious to mention Bitcoin first. You have heard and read about it in the news or on the internet. Bitcoin is the flagship of all cryptocurrencies. The coin started a whole new form of money and still is the strongest currency among virtual money. But what makes it so special and why should this interest you as an investor at all? The value of digital currencies depends on what investors believe they are worth, or how high they believe their growth potential to be. Bitcoin is widely perceived as a durable currency. People believe that, if any of the cryptocurrencies will change the way we pay in the future and even replace regular fiat money, it will be the Bitcoin. Durable does not necessarily mean stable. In addition, the fact that its value is by far the highest leaves a lot of room for movement, which is ideal for s. On the other hand, the s trader needs to be aware that the winning potential is accompanied by the risk of loss. It is advisable to follow the Bitcoin chart carefully before taking risks.

The History of Bitcoin

Bitcoin exists since 2009, a very short time in terms of the history of money, but already an old-timer in the digital world. The core idea of the electronic currency is that it is decentralized. It relies on a technology called Blockchain, which is essentially a shared general ledger in which transactions are approved on a peer-to-peer network. Transactions with regular hard currencies need to go through a bank and are regulated by the central bank. The digital currency is created by a process also known as ‘mining’. It took about a year until someone was able to use the new money to buy something with. As soon as this became possible, exchanges started and additional currencies were rapidly developed. These were often referred to as Altcoins, a combination of the words “alternative” and “coins”, as the goal was to provide an alternative to the Bitcoin and improve on it.

Ethereum

The currency with the second largest market cap is Ethereum. It is and always has been Bitcoins biggest competitor. While Bitcoin is primarily a form of electronic money, Ethereum is a platform to facilitate Blockchain-based smart contracts and apps. One could say, the currency – also known as Ether – is a byproduct used to finance these.
With the Ethereum, a new type of investor opportunity was introduced to the market. The Ethereum platform would use the cryptocurrency much like a start-up company would use stocks as a means to raise funds. In this system, the investor would purchase coins instead of shares. The more successful projects on the Ethereum platform, the more the currency is worth.

This makes the Ethereum ideal for investors looking for a long-term strategy. For the s trader, this coin is equally interesting as the Bitcoin. With a high trading volume and a much lower price, the Ethereum is a promising asset for s.

ICOs and s Trading

The fundraising activity through digital coins as Ethereum practiced it, is called Initial Coin Offering, or in short ICO. There have been countless ICOs since the Bitcoin price shot up to almost 20,000 USD at the end of 2017. Many saw this as the potential of cryptocurrencies being revealed. Consequently, it gave rise to hundreds of new cryptocurrencies being born. ICOs are in itself investment opportunities. They are suiting for investors who are somewhat software savvy and interested in long-term investments. In order to determine whether a coin has potential or not, it is necessary to understand the idea or product behind it. In addition, new currencies require new technology and a designated wallet. When it comes to s, new coins have to reach a certain level to become available as an underlying asset for s. The probability of significant price movements in the stage following the first rise is not very high.

Other Cryptocurrencies

Ripple

A very interesting currency to watch out for is the Ripple. This coin has the third largest market cap with one of the largest number of coins available. The price is very low, compared to the other leading virtual currencies. What makes this coin unique is the level of recognition as a payment network and settlement system from banks and credit institutions.

IOTA

The IOTA is interesting because it is unique among the currency. This currency was created to facilitate the internet of things. While others may also be built on a specific philosophy, the IOTA is the only one among the top cryptocurrencies addressing this issue. Like the Ripple, its value is relatively low and the number of available coins is high.

Bitcoin Cash and Litecoin

Bitcoin Cash is a later version of the original Bitcoin. It is more advanced and the transactions are faster and smoother when used as a digital payment method. Bitcoin Cash is gaining value and importance in the cryptocurrency market. Similar to the Bitcoin Cash, also the Litecoin was created on grounds of improving the original Bitcoin. Litecoin is an entirely different network, independent from Bitcoin, whereas the Bitcoin Cash forked off from the original coin. Litecoin has established itself as a digital means of payment. Among the many coins that were created around 2011/12, it is the one that has been most successful. Similar currencies are Dash, ZCash, and Monero, which puts a high emphasis on privacy.

EOS, TRON, and Cardano

These currencies are in their essence similar to Ethereum, however a lot younger. EOS can be described as a decentralized operating system and is one of the rising stars among the new cryptocurrencies. The first ICO was in June 2017, today it is among the coins with the largest market cap and trading volume. TRON falls into the same category. Even though it is still in test phase, it is already counted among the top performing digital currencies. Cardano has been around for a bit longer. The initial release took place in 2015. The currency has made its way into the best performing coins only this year. Additional currencies to mention in this category are Stellar and NEO, which also performed well and have drawn attention. As a s trader, one would probably do good to keep an eye on these coins as well.


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