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Different types of cryptocurrenciesAlmost 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.
BitcoinIt 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 BitcoinBitcoin 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.
EthereumThe 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.