Different Types Of Cryptocurrency

Cryptocurrencies can act like real money—in a sense, they are real money—but they take a digital monetary form and are not managed or governed by any central authority. A true product of the digital age, cryptocurrencies operate without the involvement of banks, governments, or any middleman. However, in most cases you will need to use a digital currency exchange to buy and sell your digital assets.
What provides security is that cryptocurrencies are encrypted (secured) with specialized computer code called cryptography. They’re designed like a complicated puzzle on purpose so that they’re hard to crack (and hack).
By September 2020, the number of blockchain wallet users rose to more than 50 million, according to research published by Statista- with Bitcoin boasting more than 7 million active users.
Crypto Tokens vs. Coins
Encrypted coins and tokens can fall under the heading of crypto. And, generally, they can be listed into two sorts of cryptocurrency: alternative cryptocurrency coins (Altcoins) or tokens.

Alternative Cryptocurrency Coins (Altcoins)
Altcoins usually refer to any coins that are not Bitcoins. Bitcoin is a popular digital currency that’s produced by computational solutions to complicated math problems. It works separately from a central bank or state entity (i.e., government-backed Treasury).

Some altcoins include:

• Peercoin
• Litecoin
• Dogecoin
• Auroracoin
• Namecoin

In fact, the name “altcoin” actually means “alternative to Bitcoin.” Namecoin is considered the very first altcoin, created in 2011.

Like Bitcoin, most cryptocurrencies listed here have a limited supply of coins—to keep the balance in check and to reinforce its perceived value. There is a fixed number of Bitcoins that can exist—21 million, as decided by the creator/s of Bitcoin, though some remain to be mined. Once all 21 million are tapped (the number changes when new blocks are mined), that’s it. The only way to bring in more is for Bitcoin’s protocol to allow for it.

Though most altcoins are built upon the same basic framework as Bitcoin, many claim to be better versions of Bitcoin.
Each system can differ from the next, as they’re created to serve various purposes and applications, and identified in different ways.

Some coins don’t work with the same open-source protocol that Bitcoin does, however. For example, the following list of cryptocurrencies have created their own separate systems and protocols:

• Ethereum
• Ripple
• Omni
• Nxt
• Waves
• Counterparty

They’re each self-supporting, too.

Tokens
Unlike altcoins, tokens are created and given out through an Initial Coin Offering, or ICO, very much like a stock offering. They can be represented as:

• Value tokens (Bitcoins)
• Security tokens (to protect your account)
• Utility tokens (designated for specific uses)

They are not so much meant to be used as money as they are used to describe a function. Like American dollars, they represent value but they are not in themselves of value. Tokens are a type of encryption, specifically referring to the long lines of numbers and letters representing the crypto used in a transaction, such as a money transfer or bill payment. In short, tokens cover a number of meanings.

For instance, both Bitcoin and Ether (from Ethereum) are considered crypto tokens.

The Most Common Types of Cryptocurrency
Here’s a list of cryptocurrency types—representing the most popular industry crypto projects (at present):

1. Bitcoin
   Possibly the “Kleenex” or “Coca Cola” of all crypto, in that its name is the most recognizable and the most closely associated with the cryptocurrency system.

There are currently more than 18.5 million Bitcoin tokens in circulation, against a present capped limit of 21 million.

1. Bitcoin Cash
   Introduced in 2017, Bitcoin Cash is one of the most popular types of cryptocurrency on the market. Its main difference with the original Bitcoin is its block size: 8MB. Compare that to the original Bitcoin’s block size of just 1MB. What that means for users—faster processing speeds.

2. Litecoin
   Litecoin is increasingly used in the same breath as Bitcoin, and it functions practically the same way. It was created in 2011 by Charlie Lee, a former employee of Google. He designed it to improve on Bitcoin technology, with shorter transaction times, lower fees, more concentrated miners.

3. Ethereum
   Unlike Bitcoin, Ethereum focuses not as much on digital currency as it does on decentralized applications (phone apps). You could think of Ethereum as an app store.

The platform is looking to return control of apps to its original creators, and take away that control from middlemen (like Apple, for instance). The only person who can make changes to the app would be the original creator. The token used here is called Ether, which is used as currency by app developers and users.

1. Ripple
   Ripple is one type of cryptocurrency on the list, but it’s not Blockchain-based . It’s not meant so much for individual users as it is for larger companies and corporations, moving larger amounts of money (its coinage is known as XRP) across the globe.

It’s more well-known for its digital payment protocol more than for its XRP crypto. That’s because the system allows for transfer of monies in any form, be it dollars or even Bitcoin (or others). It claims to be able to handle 1,500 transactions per second (tps). Compare this with Bitcoin, which can handle 3-6 tps (not including scaling layers). Ethereum can handle 15 tps.

1. Stellar
   Stellar focuses on money transfers, and its network is designed to make them faster and more efficient, even across national borders. It was designed by Ripple co-founder Jed McCaleb in 2014 and is operated by a non-profit organization called Stellar.org .

Its goal is to assist developing economies that may not have access to traditional banks and investment opportunities. It doesn’t charge users or institutions for using its Stellar network, and covers operating costs by accepting tax-deductible public donations.

1. NEO
   Formerly called Antshares and developed in China, NEO is very aggressively looking to become a major global crypto player. Its focus is smart contracts (digital contracts) that allow users to create and execute agreements without the use of an intermediary.

It’s going after its main competition, Ethereum, but NEO lead developer Erik Zhang mentioned on a Reddit AMA that NEO has three distinct advantages—better architecture, more developer-friendly smart contracts, and digital identity and digital assets for easier integration into the real world.

Ethereum, on the other hand, uses its own programming languages that developers must first learn before creating smart contracts on its platform.

1. Cardano
   Cardano aka ADA is used to send and receive digital funds. It claims to be a more balanced and sustainable ecosystem for cryptocurrencies, and the only coin with a “scientific philosophy and research-driven approach.”

That means that it undergoes especially rigorous reviews by scientists and programmers. It was founded by Charles Hoskinson, who is also the co-founder of Ethereum.

1. IOTA
   Launched in 2016, IOTA stands for Internet of Things Application. Unlike most other Blockchain technologies, it doesn’t actually work with a block and chain; it works with smart devices on the Internet of Things (IoT).

All you need to do to use it is to verify two other previous transactions on the IOTA ledger, which is called the Directed Acyclic Graph (DAG), but IOTA creators call it The Tangle.

According to Coin Central , this means the devices need to be able to purchase more electricity, bandwidth, storage, or data when they need them, and sell those resources when they don’t need them.