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Wednesday, June 30, 2021

Connecting to the Blockchain: An Introduction to the Types of Cryptocurrency

Unless you were living under a rock for the past few years, you will already be keenly aware of the importance of cryptocurrencies in the modern world. Cryptocurrencies, which are essentially digital currencies backed by the blockchain, now have a global market cap of more than $1 trillion, making it one of the most valuable asset classes on the planet.

They are entirely intangible assets and they are largely untraceable. The value of all cryptocurrencies depends mostly on market sentiment, although some types of cryptocurrencies are now pegged to fiat currencies such as the US Dollar. If you are new to cryptocurrencies and don’t know where to start, you have come to the right place. Read on to find out what you need to know about the main types of cryptocurrency.

1. Bitcoin

No guide to cryptocurrency types would be complete without bitcoin. This is essentially the cryptocurrency and the one that makes up the vast majority of the market share. Bitcoins are typically “mined” and there is only a limited amount that will ever be mined – 21 million coins. As of now, there are 19 million bitcoins in circulation.

Bitcoin can be used to pay for a vast number of goods and services and is widely invested by both individual and institutional investors alike. Bitcoin is immensely volatile but it is also the most valuable asset on the cryptocurrency market, having hit an all-time high of more than $60,000 in April 2021.

2. Altcoins

“Altcoins” is an umbrella term that describes most other types of cryptocurrency. Of these, the most popular and widely circulated are Ehtereum, Dogecoin, Litecoin, and Tether. Altcoins have varying levels of volatility and value and are typically held in crypto wallets as part of a basket of currencies.

However, there are also newer emerging currencies that are becoming increasingly popular. One of these is Stellar, which, like other new currencies, aims to connect with financial institutions to normalize crypto payments. You can check the Stellar price and instantly buy and sell the currency online, wherever you are.

3. Tokens 

There are also so-called “tokens”, which are slightly different from altcoins and bitcoins in that they do not have their own blockchain. Rather, tokens are held on decentralized apps known a “dApps”, which themselves are often built on altcoins such as Ethereum. Tokens tend to be less of a speculative asset than other cryptocurrencies and are most likely to be used to make secure online transactions.

An increasing number of tokens, such as USDC and Uniswap, are pegged to fiat currencies like to US Dollar, or to the price of gold. This is an attempt to better integrate crypto finance into the mainstream economy. If the success of tokens really does take off, it could potentially change the world. 

More Future-Proof Financial Tips 

Now that you know the main types of cryptocurrency to be aware of, it’s time to future-proof your finances. For this, we have got you covered. Check out our updated Finance guides to learn more. 



 

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Kiara Dawson
Kiara Dawson comes from an Engineering background, with a specialization in Information Technology. She has a keen interest and expertise in Web Development, Data Analytics, and Research. She trusts in the process of growth through knowledge and hard work.

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