How many types of cryptocurrency exist? A short guide for beginners April 15, 2018, 4058 there are currently more than 1,500 cryptocurrencies, every day they keep appearing New, and some countries are even ready to broadcast their national cryptocurrencies. How to classify all these tokens? We will divide them into several categories and highlight the key characteristics of each group.
What is a cryptocurrency?
The typical description of cryptocurrencies is that of a platform used for secured negotiation through encryption. It remains a virtual or digital trading platform and is used to store or transfer value. The original version is decentralized, which means that it is not regulated by any central bank or organization. This means that the currency cannot be confiscated or restricted.
The appetite for cryptocurrency arises from the fact that it allows you to negotiate with anyone in the world without worrying about government interference. Transactions are also extremely secure and free from scams. This is because the agreement between the two parties must be confirmed by the public within the blockchain ecosystem. Also, you can track the history of each coin. This eliminates the possibility of someone entering a new element in the system or claiming medals that are not yours.
Types of cryptocurrencies
The idea of a cryptocurrency dates back to 1989 when a paper on this technology was presented. However, no one bothered to develop one until 2008. They did not reach the market until 2009. Since then, many coins have emerged, already exceeding 1,500. Some are open to negotiation in general, while others are destined for a specific market.
The abundance of cryptocurrencies complicates their classification. Each has its unique characteristics and niche.
Moreover, the market itself and the concept are still too young. In fact, people are still trying to understand why there are fluctuations in the value of cryptocurrencies. All this complicates the analysis, and the same currency often falls into different categories depending on the preferences of the expert conducting the classification.
This category includes cryptocurrencies with unique features that are attractive to users. These are the most famous high-value coins on the market.
Bitcoin (Bitcoin) is the most popular cryptocurrencies. It also has the highest capitalization. The developer of bitcoin is Satoshi Nakamoto. In less than a decade, the value of bitcoin has gone from $ 0.003 to $20,000.
Everything you need to know about bitcoin and the mysterious history of its creation
The bitcoin platform allows you to transfer any amount to a satoshi (0.00000001 bitcoins). The main feature of bitcoin is its ability to transfer value. In other words, it performs the cash function in the digital market and is used to transfer amount. After making a payment, this cannot be canceled. The ability to divide bitcoin into small parts up to the eighth decimal simplifies the operation of cryptocurrencies and increases its availability. Even if a bitcoin costs $ 10,000, an investor can buy up to $ 0.0001, which makes it a currency for ordinary people. The transaction processing Commission is also meager, which saves consumers.
How many types of cryptocurrency exist?
- Litecoin (LTC/USD)
Litecoin uses a different encryption method to speed up transaction confirmation. The high speed of its operation attracts many users. Also, this cryptocurrency reduces the costs of mining equipment. Litecoin does not require powerful and expensive computers so that anyone can participate in its extraction.
How to mine bitcoins and other altcoins litecoins are four times larger than bitcoins, which simplifies work on the platform. When transactions are made in this cryptocurrencies, no intermediaries are needed either. Payments are made exclusively between the two parties: the sender and the recipient. Some support the idea; others consider it risky. However, the popularity of litecoin is growing due to its easy-to-use environment.
- Zcash (ZEC / USD)
Zcash is a relatively new cryptocurrency, as it appeared in 2016. The Zcash platform is decentralized and open-source, making it one of the most popular and fastest-growing. If bitcoin offers privacy to its users, Zcash promises them adjustable transparency and complete anonymity. All transactions that take place in a block are recorded and stored. And while these details are available to the public, other essential data, such as the amount transferred from Zcash, and the names of the sender and recipient remain anonymous. Users can also choose Advanced Encryption, which guarantees total privacy of the property or transaction. Zcash is conceived as a register of information with limited transparency
- Dash (DASH/USD)
Dash was initially called Darkcoin, and could be considered a “secret bitcoin version.” The level of anonymity here is so high that tracking transactions are almost impossible. Dash appeared in March 2014 and received full market acceptance. Dash uses a two-tier network architecture. Like bitcoin, it is a decentralized cryptomonads. Dash intends to become a leader in the field of anonymous blockchain transactions and encryption. All this is possible, thanks to the PrivateSend function.
- Native and non-native Tokens
Besides, cryptocurrencies can be divided into native and non-native Tokens. The difference can be the function of the token, the technology, or the way it is used on the trading platform.
Native cryptocurrencies are those found under the original definition of the term ” cryptocurrencies.” For example, a platform or blockchain, such as bitcoin, is a native cryptomonads. This category includes coins such as bitcoin, litecoin, ethereum, Zcash, and some others. They use similar technology. In short, this is a coin that functions as a cryptocurrency.
Non-native cryptocurrencies are coins or tokens that are meant to play a specific role. They are created for particular types of activities or transactions. This type of token or cryptocurrency is usually based on existing blockchain systems. They are now attracting a great deal of interest in the cryptocurrency market. Many companies are interested in this type of tokens, as they allow users to carry out unique transactions. An example of this type of cryptocurrencies is the token Civic, used by service providers to provide incentives to validators. Another example of a non-native token is Ox, which is used to exchange other tokens on the ethereum platform.