Today, there are more than 5,000 types of cryptocurrencies, which indicates the huge popularity and demand for digital currency.
Cryptocurrencies are conventionally divided into three types: bitcoin, altcoins (among them stablecoins), tokens (including DeFi tokens). Each of these electronic currencies has its own characteristics. Many people think that bitcoins and altcoins are money. But, there is wrong. Bitcoins and altcoins are complex digital products that have their own crypto code and encrypted record. And, in order to obtain the status of an electronic currency, they go through a very complex mechanism of processing and transformation using special technologies.
In this article, we will take a closer look at the meaning of cryptocurrency, the types of cryptocurrencies, and their features.
Cryptocurrency is a digital currency that is not regulated by the state, and no government in the world can influence the release and transfers of this currency since all data is encrypted. There are many types of cryptocurrencies today. Among them are the most popular ones: Bitcoin, Litecoin, Ether, Bitcoin Cash, Ripple, and DBX tokens.
Advantages of cryptocurrency
- Lack of intermediaries
- Cryptocurrency is not subject to inflation
Disadvantages of cryptocurrencies
- Risk of being banned from government authorities
This cryptocurrency appeared the first and today remains the leading electronic coin.
Bitcoin is a decentralized electronic payment system that provides the ability to make transactions without the participation of a bank or other financial institution.
This cryptocurrency is considered a digital alternative to fiat money and gold.
Bitcoin, like many other currencies, has its own risks that should be kept in mind by all users of this currency:
- significant cost fluctuations of BTC during trading;
- external risk of how this cryptocurrency will be regulated.
After Bitcoin was successfully launched in 2008, many other cryptocurrencies began to appear, which are considered an alternative to Bitcoin and are called Altcoins.
Types of Altcoins
This currency was created by Charlie Lee in 2011. Litecoin is one of the first cryptocurrencies to emerge after Bitcoin. This cryptocurrency was created as an analog of bitcoin. Litecoin is known for generating new blocks more quickly, which allows making transactions faster.
Ethereum was created in 2015; its tasks are significantly different from those of Bitcoin.
Ethereum is a kind of cryptocurrency and programs blockchain that allows developers to create and run applications (DApps) and smart contracts.
Ripple (XRP) was launched in 2012. Ripple is a network that provides users with fast payments and charges minimal fees. Ripple's goal is to provide the ability to send money from different parts of the world. This advantage has made this cryptocurrency especially attractive for banks looking to settle international transactions. Unlike bitcoins and other altcoins, Ripple uses less processing power as it does not require mining.
These cryptocurrencies are considered one of the most famous of the altcoins, but there are other types of altcoins. New altcoins are also emerging very often today.
Like Bitcoin, all kinds of altcoins can operate independently on their own networks through the use of distributed ledger technology (DLT).
The most popular type of DLT is blockchain technology. Altcoin becomes unique due to variations in the base code of each protocol.
This type of cryptocurrency does not have its own blockchain, so it cannot exist on its own like bitcoin and altcoin. Therefore, tokens are installed on the blockchain of another cryptocurrency.
Tokens are installed on blockchains of such cryptocurrencies as:
Most demanded tokens such as UNUS SED LEO, Chainlink, Huobi Token, and Maker are hosted on the Ethereum blockchain.
“DBX” is a digital financial asset that consists of a system of decentralized distributed databases (blockchains) and operates using cryptographic algorithms. This kind of cryptocurrency is considered very profitable.
Despite the fact that DBX tokens have appeared quite recently, they are already gaining immense popularity and are in high demand among electronic currency holders. Today, payments in cryptocurrency are very popular and in demand. Due to this fact, government authorities are increasingly trying to control this type of currency and limit its use. Therefore, the developers of the DBX ecosystem decided to combine traditional payment services and blockchain in order to eliminate the most basic problems in the use of cryptocurrencies, such as the volatility and the risks of tightening the policy regarding the use of cryptocurrency.
Since the DBX digital ecosystem is based on multiple blockchains, this distinguishes the cryptocurrency from the rest of the others, as the DBX team was able to provide huge benefits to its users. The main advantages of using DBX tokens are:
- safe and fast transactions;
- the smooth operation of the cryptocurrency ecosystem;
- anonymity, and confidentiality;
- interchangeability of coins, etc.
Cryptocurrency has entered our daily life and is one of the most convenient ways to make transactions. Electronic currency is gaining more and more popularity, especially during a pandemic and economic crisis. Moreover, it is not only profitable and convenient to make purchases with cryptocurrency, but also to invest in it. Today, there are different types of electronic currencies, and it is important to choose a cryptocurrency for use that is more reliable and stable. Thus, you will have the opportunity to make a profitable investment and get huge profits from it.