Five Types Of Cryptocurrency You Need To Know About
The global economy is being challenged by the greatest phenomenon of this age, cryptocurrencies. The competitive nature of fiat currencies and cryptocurrency wealth management is best umpired by technologies like blockchain. These technologies are consistently policing the timeline of financial development worldwide.
However, there is no “best” cryptocurrency since each cryptocurrency has a different set of built-in features based on what the developer designed it for. Below is a list of the most popular cryptocurrencies and how each can be used:
Bitcoin is a cryptocurrency that facilitates payments and digital transactions using blockchain technology. It is considered the first decentralised cryptocurrency. As opposed to a central bank supplying money in an economy or a third party verifying transactions, such as a credit card company or merchant’s bank, Bitcoin’s blockchain acts as a public record of all Bitcoin transactions.
By keeping track of this ledger, a party can prove ownership of Bitcoin used and prevent unapproved tampering of the currency. Having a decentralised currency makes peer-to-peer money transfers such as those between parties in two different countries, less costly and easier than traditional currency exchanges which involve third parties.
- Ether (Ethereum)
In the Ethereum network, transactions are facilitated by Ether tokens. As a blockchain-based platform, Ethereum enables developers to build smart contracts as well as other decentralised applications, meaning they don’t have to distribute their software through app stores, where they might have to give app exchange – 30% of any revenue they generate. As a result, Ethereum can be thought of as a cryptocurrency in which the coins themselves are measured in the unit of Ether, and a software development sandbox.
- Binance Coin
In addition to other digital coins, traders can currently trade Binance Coin on the Binance cryptocurrency exchange platform. The Binance Coin can be used as currency as well as a token for paying fees on the Binance Exchange and powering the Binance DEX (decentralised exchange) in order to make apps.
- XRP (Ripple)
RippleNet is a digital payments platform built by the company Ripple, which provides XRP as a digital currency. Financial institutions can use this platform to scale digital payments around the globe and reduce the costs associated with conventional cross-border payments. XRP can also be used to extend short-term credit lines.
The Tether cryptocurrency identified as stablecoins is a digital currency backed by fiat currencies, in this case, U.S. dollars. Tether combines the benefits of a cryptocurrency such as the absence of financial intermediaries, with the value stability of a government-issued currency versus wild price fluctuations associated with many other cryptocurrencies.
With the advent of blockchain technology, thousands of different digital currencies are being used for a wide range of different purposes within the digital economy. Although Bitcoin has gained a lot of popularity among a young generation of consumers, developers continue to innovate new blockchain technologies and applications. This gives other platforms such as Ethereum a lot of value since it enables them to develop new software. The decentralised blockchain may also hold a lot of appeal for investors looking for a glimpse into the future since it can eliminate third parties from business transactions and increase the efficiency of payments globally.