Digital money and types of cryptocurrencies

types of cryptocurrency

All types of cryptocurrencies can be conditionally divided into four types: bitcoin, altcoins, stablecoins and tokens.

What is digital money?

Digital currency – electronic money with the properties of conventional (fiat), which can be regulated and unregulated. This is a general term for all electronic money (money in the digital space). Digital currencies include virtual currencies and cryptocurrencies. Digital money is also called cyber cash.

Virtual currency is a type of digital currency. All virtual currencies are digital (they only exist on the Internet), but not all digital currencies are virtual.

Cryptocurrency is a kind of virtual currency created using cryptographic methods and mathematical calculations, mainly based on the blockchain. It is both digital and virtual currency because it exists on the Internet and was created using cryptographic algorithms.

Cryptocurrency: types and their features

All types of cryptocurrencies can be conditionally divided into three main types: bitcoin, altcoins (including stablecoins), tokens (including DeFi tokens). Each of the coins from these groups has its own characteristics.

By themselves, bitcoin and altcoins are not money in the usual sense, but a complex digital product with its own crypto-code and encrypted record. To get the status of money, even digital, they go through a complex mechanism of transformation and processing with the help of special technologies.

Bitcoin (BTC)

It is the first cryptocurrency created in January 2009 by an unknown person or group of people who called themselves Satoshi Nakamoto. Bitcoin is the founder and leader among all cryptocurrencies, it is called “electronic gold”.

Ethereum

The second most popular and capitalized cryptocurrency in the world. Despite its relatively young age, the trading volume of ethereum or ether, as this type of digital money is often called, has reached $44 billion at the moment, far exceeding all other cryptocurrencies, with the exception of bitcoin. The Ethereum payment system was launched in mid-2015. In a little over two years, the cryptocurrency was able to confidently take second place, in some segments making up strong competition to the recently seemingly unattainable bitcoin. Some experts consider ether to be the most promising type of virtual money.

Litecoin (LTC)

The system appeared in October 2011. Its creator is former Google employee Charlie Lee. He tried to base his currency on the correspondence of its price on the cryptocurrency exchange to the market prices of silver. At the same time, Bitcoin corresponds to the market prices of gold. That is why Litecoins are called “electronic silver”.

Primecoin (XPM)

Primecoin is a modified copy of Bitcoin. It was launched without prior block generation on July 7, 2013. The currency was developed by Sunny King, who also created other well-known cryptocurrencies. Its main difference is the usefulness of calculations. The system calculates prime numbers, including Cunningham sequences.

Peercoin (PPC)

The Peercoin system, created in August 2012, ranks third in popularity among cryptocurrencies.Its distinguishing feature from the Litecoin and Bitcoin systems is the absence of any restrictions on the amount of coins issued, but the presence of inflation at a rate of 1% per year.

The creators of Peercoin, like most others, used the open source code of the Bitcoin system in their development. To popularize their currency, as well as to attract users to buy Peercoins, they came up with a motivation that distinguishes this currency from others. In the Peercoin system, income is shared not only between the miners who provide their computing power, but also between the owners of the currency itself.

The number of cryptocurrencies existing on the financial market today is extremely large and is not limited to the types of digital money described in the article. Moreover, it is safe to say that their number will only increase in the coming years. Therefore, it is extremely important to study market trends and correctly assess its prospects before acquiring a particular cryptocurrency.

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