The Most Popular Types of Cryptocurrencies
Cryptocurrencies also known as digital currencies are created and held electronically. Unlike traditional money, cryptocurrencies aren’t printed and no one controls them. Cryptocurrencies are produced by people and in more recent times by businesses who are running computers all over the world, by using software that attempts to solve mathematical problems.
There are estimated to be over 4,000 cryptocurrencies in the world. Bitcoin is the most well-known type of cryptocurrency.
Here is some important information about the most popular types of cryptocurrencies and how they all differ from each other.
Bitcoin (BTC) – Launched in 2009, bitcoin is the first ever and the most popular form of cryptocurrency. Bitcoin was created as a reward for a process which is commonly referred to as mining.
Similar to most cryptocurrencies, Bitcoin runs on a blockchain, or a ledger logging transaction distributed across a network of thousands of computers. Because additions to the distributed ledgers must be verified by solving a cryptographic puzzle, a process called proof of work, Bitcoin is kept secure and safe from fraudsters.
Bitcoin can be exchanged for other currencies, services or products. However, the real-world value of bitcoin is extremely volatile and unpredictable. Although its value has climbed steadily since its conception, it has witnessed fierce fluctuations over time.
Ethereum (ETH) – Ethereum is both a cryptocurrency and a blockchain platform. The system allows you to use ether (the currency) to perform a number of functions. Ether is second most popular cryptocurrency. The smart contract aspect of Ethereum is what makes the currency extremely popular.
Ethereum is an extremely popular with program developers because of its potential applications, like so-called smart contracts that automatically execute when conditions are met and non-fungible tokens (NFTs).
Tether allows individuals to utilize a blockchain network and related technologies to transact in traditional currencies while minimizing the volatility and complexity often associated with digital currencies.
USD Coin (USDC) – USD Coin is also a stablecoin that pins its price to the U.S. dollar using fiat-collateralized reserves, which means it holds an amount of fiat currency equal to the amount of USD Coin in circulation. USD Coin was launched in 2018 by the Centre Consortium, which consists of Circle and Coinbase. Since Circle is based in the U.S., it is subject to regulation, this makes USD Coin a regulated stablecoin.
Binance Coin (BNB) - is a utility cryptocurrency that operates as a payment method for the fees associated with trading on the Binance Exchange. It is the third-largest cryptocurrency by market capitalization. Those who use the token as a means of payment for the exchange can trade at a discount.
XRP – XRP was invented by some of the same founders as Ripple, which is a digital technology and payment processing company, XRP can be used on that network to facilitate exchanges of different currency types, including fiat currencies and other major cryptocurrencies.
Cardano (ADA) – Cardano was created with a research-based approach by engineers, mathematicians, and cryptography experts. The project was co-founded by Charles Hoskinson, one of the five initial founding members of Ethereum. After disagreeing with the direction that Ethereum was taking, he left and later helped to create Cardano.
Cardano has also been dubbed an “Ethereum killer” because its blockchain is said to be capable of more. That said, Cardano is still in its early stages. Though it has beaten Ethereum to the PoS consensus model, it still has a long way to go regarding DeFi applications.
Cardano aspires to be the world’s financial operating system by establishing DeFi products similar to Ethereum's and providing solutions for chain interoperability, voter fraud, and legal contract tracing, among other things.
Solana (SOLO) - Founded in 2017, Solana is a blockchain platform designed to support decentralized applications (dApps). Also referred to as an 'Ethereum killer,' Solana performs many more transactions per second than Ethereum. Additionally, it charges lower transaction fees than Ethereum.
Solana and Ethereum can both utilize smart contracts, which are essential for running cutting-edge applications, including decentralized finance (DeFi) and non-fungible tokens (NFTs). However, Solana and Ethereum do have some huge differences.
Ethereum uses a proof of work (PoW) blockchain, meaning miners compete to solve complex puzzles to validate transactions, making this technology more energy-intensive and thus more damaging to the environment. In contrast, Solana uses proof of stake (PoS), which is said to be less harmful than PoW.
Dogecoin was created by two software engineers, Billy Markus and Jackson Palmer, in 2013. Markus and Palmer reportedly created the coin as a joke, commenting on the wild speculation of the cryptocurrency market.
